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After months of waiting, the South African Competition Commission has recommended that the local Competition Tribunal block the sale of WeBuyCars to Naspers.

The AIM Group first reported on the proposed deal back in September 2018, when Naspers announced its intention to invest R1.4 billion ($94.4 million U.S.) in the SA car buying service, through its subsidiary OLX. Group. A statement from the Competition Commission revealed that the purchase would have been made through OLX’s parent MIH eCommerce. The company hoped to buy 60 percent of WeBuyCars.

We Buy Cars — and its sister business We Sell Cars — essentially buys vehicles from private consumers before reselling them online, at one of its physical locations around the country, or via auctions. Vehicle inspectors visit the consumer in a place that’s convenient for them. They then test the car before making an offer.

“Although the Commission found that the proposed transaction does not present any competitor (horizontal) overlap in South Africa (as the Naspers Group is not active in the buying and selling of cars), it was found that the Naspers Group through Frontier Car Group (FCG) has been anticipating entering the South African market for the wholesale and online buying of used cars, in competition with WeBuyCars,” the commission said. “These entry plans were thwarted directly as a result of the merger.”

Naspers invested $89 million in emerging markets car buying service FCG in May 2018, also through the OLX Group.

The Competition Commission believes the deal would have stopped WeBuyCars’ only competitor from entering the market, thereby resulting in “a substantial lessening of competition through exclusion.”

Sjoerd Nikkelen

Sjoerd Nikkelen

Naspers also owns South Africa’s No.1 auto vertical AutoTrader.co.za, which it bought in November 2017. The Commission found that Naspers would be able to “harness the complementarities between WeBuyCars and AutoTrader and OLX to the exclusion of effective competition against WeBuyCars rivals as well as other online platforms.”

The authority added that the merger could affect the business of small used-car dealers who may not get the same preferential treatment from AutoTrader.co.za.

“We are very disappointed by the recommendation and respectfully disagree with the Commission’s findings,” OLX GM for Africa, Middle East, and Asia Sjoerd Nikkelen told the AIM Group. “As a long-term investor in South Africa, we believe that the transaction — which will bring an R1.4 billion investment to the country — will help stimulate the economy and will provide more consumers with innovative and convenient models to buy and sell used cars.”

The matter will now be argued before the Competition Tribunal later this year.