Trade Me unable to acquire Motorcentral
The Commerce Commission has declined to grant clearance to Trade Me to acquire Motorcentral (Limelight Software Limited).
Posted on 08 March, 2018
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
Alan Clark, Head of Trade Me Motors, told Autofile he was disappointed the application had been declined.
"We're obviously disappointed our application has been declined, and that it's been a long and winding road since we submitted our application back in July 2017," says Clark.
"The Commission has given us a high level view of its reasons for declining an application - but we're keen to understand the full rationale in its written decision which we're awaiting. We'll consider all our options, including appeal, from here.
"In any case we're exploring how we can work together with Motorcentral to deliver some of the benefits we had planned for dealers."
Mena Eskander, director of Motorcentral, told Autofile that they and Trade Me are working out how they can still deliver the benefits that the acquisition would have given their mutual customers if it was accepted.
“Naturally Trade Me is the largest online market base, and Motor central is the largest supplier of DMS software, so there is naturally going to be some synergies and benefits that we can achieve and deliver to our common customers if we were together. The acquisition was very much based on that but naturally we will seek to find out how we can deliver those benefits otherwise."
Eskander also remains optimistic about the future of Motorcentral: "We are disappointed but we have no reason to shed too many tears, its onwards and upwards from here. Trade Me is a significant part of this industry and naturally we will work with them and others to make sure our position in the market is solid and that we are able to deliver a lot of benefits to the industry."
Updated timeline of events:
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 30, 2017:
Motorcentral launched a new website
, which allows customers to search more than 22,000 cars throughout New Zealand.
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