Russian Competition Authorities Block Avito's Planned Acquisition of Cian

Competition authorities in Russia have moved to block the proposed acquisition of leading real estate vertical site Cian.ru by Prosus-owned horizontal Avito.

The proposed deal would have seen the leading horizontal and vertical sites join forces to create a player with an estimated 62% combined market share. A scenario which the Russian Federal Antimonopoly Service (FAS) ultimately declined to permit.

While the FAS did admit that it was probable that the average Russian consumer would see fewer fraudulent listings if a merger went ahead, ultimately it concluded that this outcome could be achieved by other means. The deal was denied on the grounds that it would be likely to raise prices for the services of both Avito and Cian.

According to reports in Russia, Avito had submitted the deal to authorities over the summer after which the FAS contacted rival property portal companies in the country to understand pricing and business practices in the industry. The story came to light on the 21st of September after Forbes spoke to a source 'close to the FAS'.

Denied its acquisition, Avito remains one of the leading lights of the Prosus classifieds division, its profit margins decreased from 51% in FY20 to 40% in FY21 due to increased investment and marketing activity according to company accounts.

Cian on the other hand may now resume its path towards an IPO or its investors, a group that includes Elbrus Capital and Goldman Sachs, may encourage an acquisition by another classifieds giant now that its openness to such a deal is out in the open.