The Commerce Commission has declined to grant clearance to Trade Me to acquire Motorcentral (Limelight Software Limited).
In July 2017, Trade Me, an online marketplace and classified advertising platform, sought clearance to buy Motorcentral, a Christchurch-based supplier of motor vehicle dealer management (DMS) software.
DMS software is used by motor vehicle dealers to manage their businesses and may include functionality such as keeping track of inventory, customer relationship management, and uploading vehicle listings to online advertisers. Trade Me currently operates DealerBase which has some of those functions.
In making its decision, the Commission considered the effects of the merger on competition in the provision of DMS products to independent motor vehicle dealers and in the supply of online classified advertising to motor vehicle dealers.
Chairman Dr Mark Berry said the Commission could not be satisfied that the merger would not be likely to substantially lessen competition in the relevant markets.
“The merger would combine Trade Me, which is the most popular online classified advertising platform for motor vehicle dealers, and Motorcentral, which is the largest provider of DMS products to independent motor vehicle dealers in New Zealand. Based on the evidence received, we could not exclude the real chance that this could result in a substantial lessening of competition in these markets, including deterring new entry,” Dr Berry said.
“Trade Me is an important advertising platform for car dealers and we were concerned the merger could result in Trade Me creating barriers for dealers who do not use Motorcentral’s DMS. Likewise, we were concerned Motorcentral could create barriers for dealers who want to list on rival advertising websites or any new potential entrants.”
“On the evidence available to us, we could also not exclude the real chance that, absent the merger, Trade Me could become a stronger competitor to Motorcentral. The merger could also entrench the market power Trade Me holds for online classified advertising to motor vehicle dealers.”
Trade Me and Motorcentral’s view
July 11, 2017: Trade Me entered into a conditional agreement to purchase cloud-based dealer platform Motorcentral, pending approval from the Commerce Commission.
Director Mena Eskander said of the merger, that Motorcentral has been approached in the past, but it was with Trade Me that he felt satisfied an acquisition would positively impact the key sectors of the business, and the Motorcentral team will remain with the company.
Head to last year’s July issue for a more in-depth discussion about what the two companies have to offer one another and what the acquisition means going forward.
July 25, 2017: The Commerce Commission published a statement of preliminary issues regarding the sale of web-based DMS Motorcentral to Trade Me, and invited interested parties to comment on the merger.
In its statement of preliminary issues, the Commerce Commission said it will be focusing on whether the sale will reduce competition in the industry, and if the merged businesses would be able to foreclose rivals and render them less able to compete in the sector.
October 31, 2017: The Commerce Commission delayed their decision on whether Trade Me is clear to acquire Limelight Software Ltd, trading as Motorcentral.
December 21, 2017: The Commerce Commission requests further extension until 28 February, 2018.
February 27, 2018: The Commerce Commission requests, for the third time, a further extension until 9 March, 2018.
March 9, 2018: Comcom declines clearance for Trade Me to acquire Motorcentral