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CMA raises competition concerns regarding eBay’s $9.2B Gumtree deal

CMA raises competition concerns regarding eBay’s $9.2B Gumtree deal
CMA raises competition concerns regarding eBay’s $9.2B Gumtree deal

The Competition and Markets Authority, Britain, has reportedly raised concerns that the $9.2 billion deal for the creation of the largest classified ads business at the global level could decrease consumer choice and escalate the charges paid by people for advertising goods online.

As per reliable sources, Adevinta’s proposed purchase of Gumtree from eBay would promote the combination of websites that enable people to buy and sell used or new items like furniture, clothes, and electronics. The eBay marketplace reportedly represents the largest such platform in the United Kingdom.

Expounded in 2019 from the Norwegian publishing group Schibsted, the deal would reportedly make Adevinta the largest classified ads business at the global level with annual revenues of $1.8 billion. The company beat its rival bidders, comprising Prosus and Naspers, by providing eBay a big stake, even though the rivals offered the marketplace with more cash as part of their bids.

eBay had reportedly come under pressure from activist investors, Starboard Value and Elliott Management, to divest in its classifieds business unit and cut costs in face of escalating competition from Walmart and Amazon.

According to the CMA, it was concerned that the transaction could lead to a decrease in the competition between Gumtree, Shpock, and eBay’s marketplace, with merely Facebook Marketplace staying as a big competitor. This could eventually bring about a reduction in the consumer choice, increase fees, or decrease innovation in the supply of platforms that enable people to purchase and sell goods online.

eBay would acquire a voting stake of 33.3 per cent in Adevinta and positions on its board following the sale of the eBay Classifieds Group business, which runs Motors.co.uk and Gumtree. This would also allow the company to influence the business strategy for Shpock and Gumtree, added the CMA.

Source credit: https://www.theguardian.com/business/2021/feb/16/ebay-gumtree-sale-competition-cma-shpock-adevinta

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Nandita Bhardwaj

Nandita holds a management degree with specialization in marketing, and boasts of a short-term experience in the field of recruitment. Following her passion for writing however, she decided to pursue a career in the field of content development. Presently, Nandita pens down news pieces for newsorigins.com, spanning the verticals of business, finance, and technology.