Gumtree sale ‘could lead to higher prices and less choice’
Gumtree is currently owned by eBay, but is the subject of a proposed takeover by Adevinta, parent firm of ‘online boot sale’ website Shpock for £6.5bn. The deal would see eBay take a 33.3% voting stake in Adevinta, as well as positions on the Adevinta board.
The Competition and Markets Authority (CMA) has cautioned that this would give eBay influence over the management of Adevinta, and potentially the business strategy for both Gumtree and Shpock.
The CMA is conducting an investigation into the proposed sale, and said that it believes eBay had a “realistic chance” of selling Gumtree to a different purchase without retaining its influence, which would have meant Gumtree became an independent competitor to eBay’s marketplace.
The body has now completed its phase one investigation into the deal, and warned that it could lead to a loss of competition between Shpock, Gumtree and eBay, with Facebook Marketplace remaining as the only “significant competitor”.
As a result, this could reduce choice, lead to higher fees for buyers and sellers, and limit innovation in the sector.
Joel Bamford, senior director of mergers at the CMA, said that it was important that people have choice when it comes to selling their old items or shopping for a bargain online, and that they can enjoy “competitive fees and services”.
He continued: “There is a realistic chance that without this deal Gumtree and Shpock would have been direct competitors to eBay, which is by far the biggest player in this market.”
Adevinta and eBay now have until 23rd February to offer solutions to resolve the CMA’s concerns. At this point the CMA can decide to accept those solutions or refer the deal on for an in-depth investigation.
eBay last year came under fire for failing to tackle its ‘flawed’ review system which was leading to shoppers being misled.