EBay Inc’s (NASDAQ:EBAY) sale of the Gumtree online shopping site has run into UK competition problems due to the prospect of it becoming a major shareholder in Adevinta, the buyer.
The US eCommerce giant has agreed to sell cCG, the classified group that owns Gumtree, to rival marketplace owner Adevinta for £6.5bn, but will end up with a 33.3% voting stake and some seats on its board.
UK regulator, the Competition and Markets Authority, says this means eBay will be able to participate in the management of Adevinta and could influence the business strategy for both Gumtree and rival Shpock, which is owned by Adevinta.
Competition between Shpock, Gumtree and eBay’s Marketplace might reduce as result it said, with only Facebook Marketplace remaining as a significant competitor.
The regulator added that there had been a chance that Gumtree would be sold to someone else, meaning it would have become an independent competitor to eBay marketplace.
Adevinta and eBay now have a week (until 23 February 2021) to offer legally binding solutions to resolve the CMA’s competition concerns.
Joel Bamford, the CMA’s Senior Director of Mergers, said: “It is important that people have choice when it comes to selling items they no longer require or searching for a bargain online, and that they can enjoy competitive fees and services.
“There is a realistic chance that without this deal Gumtree and Shpock would have been direct competitors to eBay, which is by far the biggest player in this market.”