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.
ends