UK's competition watchdog investigates eBay Gumtree deal

By

Sandra Halliday

Published
Feb 16, 2021

​eBay’s plan to sell Gumtree to Norway-based international classifieds website Adevinta ASA has hit a stumbling block with the online retail giant saying the UK’s Competition and Markets Authority (CMA) “has concerns that the proposed transaction could reduce competition” in Britain.

It does’t mean the deal is off as the two parties now “have the opportunity to propose potential remedies to avoid the transaction being referred to further investigation”. They said that “while eBay and Adevinta do not agree with the CMA's reasoning, they will work constructively with the CMA and are confident in finding a suitable resolution”.

Adevinta owns the Shpock website in the UK, which is a major sales site for used fashion items. Under the terms of the deal, eBay is to acquire a 33.3% voting stake in Adevinta and seats on its board. It means it would be able to influence decision-making for both Gumtree and Shpock.

The two firms now plan to “propose legally binding solutions to resolve the CMA's competition concerns before the deadline of February 23”. The watchdog will then have five working days to consider whether to accept the solutions, or refer the deal to an in-depth investigation that could create a major delay. 

Their arguments for the deal not impacting competition in the UK stem from eBay Classified Group's UK business having accounted for less than 10% of its consolidated revenues in 2019 and Adevinta's UK business having accounted for only 1% of its consolidated revenues in that year.

The CMA could still scupper the deal though, as it did in 2019 when it blocked the planned mega merger between supermarkets giant Sainsbury’s and Asda. The eBay deal has a much lower-profile than the Sainsbury’s-Asda plan, of course.