Clearance declined for Trade Me to acquire Motorcentral

Issued 9 March 2018

Commission declines clearance for Trade Me to acquire Motorcentral

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.”

A public version of the written reasons for the decision will be available on the Clearances Register in the near future.

Background

When considering a proposed merger, the Commission must determine whether any competition that would be lost with the merger would be substantial. We will give clearance to a proposed merger only if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market. A fact sheet explaining how the Commission assesses a merger application is available on the clearances page.

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