Weelee can 'intervene' in WeBuyCars deal with Naspers subsidiary

It can intervene in the proposed takeover of WeBuyCars by MIH eCommerce. 

Pre-owned car retailer Weelee has been granted permission by the Competition Tribunal to intervene in the proposed takeover of its competitor WeBuyCars by Nasper’s subsidiary MIH eCommerce. 

In September 2018 MIH eCommerce, which owns car dealership AutoTrader, said it will buy 60 percent of WeBuyCars for R1.4 billion.

In May, the Competition Commission, which assesses large mergers before referring them to the Tribunal for a final decision, recommended that the deal be blocked as it could lead to higher used-car prices in South Africa. It said that the merger could stop other businesses with similar activities from entering the market. 

The Tribunal said it had issued an order for Weelee to participate in the hearings. According to the commission, Weelee applied to be recognised as an “intervenor” in the merger proceedings arguing that it is a competitor to WeBuyCars and that while it has been called as a witness for the commission this status does not give it sufficient protections over its interests.

The merging parties — MIH eCommerce and WeBuyCars —opposed Weelee’s application.

At the hearings, Weelee will have the right to access the commission’s records and any additional documents filed by the merging parties and cross-examine the merging parties’ witnesses, said the Tribunal.

During its investigation, the commission found that in the automotive segment, Naspers already has investments in Dubai-based companies Expat Wheels and WeCashAnyCar and in multinational used-car marketplace Frontier Car Group.

While the WeBuyCars deal “does not present any competitor overlap in SA”, as the Naspers group is not involved in buying and selling cars, “it was found that the Naspers group, through Frontier Car Group, has been anticipating entering the SA market for the wholesale and online buying of used cars in competition with WeBuyCars”, the commission said.

“These entry plans were thwarted directly as a result of the merger.”

As such, the deal could remove potential new competition in the form of Frontier Car Group. The commission said another concern is that Naspers owns and operates online automotive advertising platforms including AutoTrader, which WeBuyCars uses to sell and purchase vehicles.

“It is the view of the commission that the merged entity will have the ability to leverage its significant AutoTrader position as well as the OLX platform to exclude rivals of WeBuyCars.”

The deal could result in the foreclosure of other traditional dealers, the commission said.