Weelee wants to 'intervene' in WeBuyCars deal with Naspers subsidiary

Weelee, a competitor of online car retailer WeBuyCars, wants the Competition Tribunal to grant it permission to "intervene" in a Competition Commission case relating to a proposed deal between WeBuyCars and Naspers subsidiary MIH eCommerce.

MIH eCommerce is mainly an investment holding company and has investments in online marketplace OLX and the Naspers subsidiary, Car Trader, which operates as AutoTrader.

Naspers announced in September last year that its classifieds business OLX Group would invest R1.4bn in WeBuyCars. MIH eCommerce wants to acquire 60% of WeBuyCars.

The Competition Commission assesses large mergers before referring them to the Tribunal for a final decision.

Although the Commission found in May that the proposed transaction does not present any horizontal competitor overlap in South Africa, it nevertheless recommended to the Tribunal that the deal be prohibited.

In the view of the Commission, the proposed deal could stop other businesses with similar activities from entering the market or markets and that the resultant "merged entity" would dominate any competitors.

In the view of the Commission, there is a vertical (supplier-customer relationship) overlap because "Naspers Group owns and operates OLX and Auto Trader, and WeBuyCars utilises these platforms to either sell or purchase vehicles".

The Commission is of the opinion that the proposed transaction will result in the removal of Naspers Group as a potential effective competitor to WeBuyCars in the niche segment of wholesale and online buying of used cars using an instant cash model from the public and the consequent selling to dealers and others.

This is the market segment that is currently dominated by WeBuyCars, which owns a significant share of this market, according to the Commission.

MIH eCommerce and WeBuyCars, however, oppose the Commission's prohibition recommendation and the Tribunal is set to hear evidence and argument in the matter from October 14, 2019.

Weelee, an online intermediary which facilitates the sale of used vehicles by private individuals to second-hand vehicle dealers, has already been called as a witness for the Commission in the case to come before the Tribunal on October 14.

In the view of Weelee, however, the status of a mere witness in the Commission's case does not afford it sufficient protection over its own interests.

According to the Tribunal, Weelee also wants the right to access the merger record and all other documents filed to date; to adduce its own evidence; to cross examine any of the merging parties' witnesses; and to have the right to request the Tribunal to call or order any person to appear at the merger hearing and produce relevant documents.

The Tribunal will hear Weelee's application requesting to be added as an "intervenor" to the Commission's case, on Friday October 4.

According to the Tribunal, both MIH Ecommerce and WeBuyCars intend to oppose this as well.

* Fin24 is part of Media24, a subsidiary of Naspers.

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