AutoTrader merger with Naspers-owned OLX gets green light

2017-11-02 12:36 - Kyle Venktess and Matthew le Cordeur
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Cape Town – The Competition Tribunal said on Thursday that it has approved the merger between AutoTrader and OLX.


This follows a hearing at the Competition Tribunal on Wednesday, where the companies assured the authorities that there would be no job losses in the merger.

The Competition Commission had recommended that the merger be approved without conditions, but the Tribunal had requested that a draft be submitted in writing that no retrenchments would take place.

"The tribunal approved the merger with a public interest condition that the merging parties shall not retrench anyone for a period of two years from the approval date," the tribunal said in a statement on Thursday.

The new owner of AutoTrader, OLX is a Naspers-owned online marketplace, while AutoTrader is South Africa's leading online vehicle marketplace. Naspers was trading 0.37% lower on the JSE at R3 462 per share at 12:15 on Thursday.

"Based on what we see in other markets around the world, the pace of innovation in the vehicle buying and selling space is picking up and global consumer facing technology platforms are entering,” Sjoerd Nikkelen, OLX general manager for Africa, Middle East and Asia, said in a statement on Thursday.

“This partnership will give us the scale to lead this coming wave of innovation and disruption in South Africa, in which deep data skills will allow for our propositions to dealers and consumers alike to become fundamentally more valuable and of higher convenience.”

AutoTrader CEO George Mienie added: “We bring the expertise from the niche verticals of car, truck, commercial, agriculture, bike and leisure.

“We are excited to work with the OLX Group that is part of a global company. Our customers can stand to benefit substantially from investment in product innovation as a result.

“Our vehicle shoppers can look forward to continuous improvements to further enhance consumer experience through investment in online vehicle shopping tools.”

While AutoTrader will remain a separate brand, it will have access to world-class technology hubs and expertise, which it believes will drive the growth of the platform.

Why commission said merger could be approved without conditions

The hearing heard on Wednesday that concerns had been raised by a competitor around the dominance of the merged company.

However, representatives said that OLX was a relatively small player when compared to other market participants.

OLX generates over 1.7 billion page visits and 54 million listings every month on its online marketplaces.

“The commission found from its research and in coming to its decision to approve the merger without conditions that customers have such power as they are able to negotiate fees payable with their respective services provider based on their historical sales achieved and leads generated by a particular website,” the commission said.

This was one of the reasons the commission recommended that the merger be approved without conditions, after it was decided that the move would unlikely change the market.

“Furthermore, customers can switch from one service provider to another based on the performance of the site and not necessarily on price increases.

“In addition, customers enter into non-exclusive annual contracts with multiple online suppliers which can be terminated with a month’s notice,” the commission added.

* Fin24 is part of Media24, which is owned by Naspers.


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