THE proposed purchase by Gumtree of the Cox Automotive Australia online media platforms CarsGuide and Autotrader is unlikely to lessen online automotive competition, according to a submission by Gumtree to the Australian Competition and Consumer Commission (ACCC).

Gumtree, which is ultimately owned by international online classifieds giant eBay, announced just before Christmas that it has agreed to buy Cox Australia Media Solutions from Cox Automotive Australia (70 per cent) and DealerMotive (30 per cent) which is a consortium of Australian dealer groups.

The move would result in eBay owning three distinct online auto media platforms: Gumtree Cars, CarsGuide and Autotrader which it plans to continue to operate as separate platforms.

The ACCC has distributed documents to interested parties to seek their reaction to the acquisition.

The ACCC’s review is focused on the likely effects on competition, as well as whether the public benefit from the proposed acquisition outweighs the public detriment.

In particular, the ACCC says it is considering:

• How closely Gumtree and Cox Media (through CarsGuide/Autotrader) compete with each other in the supply of online automotive classifieds to commercial advertisers (eg car dealers) and private advertisers.
• Whether competition from other online classifieds platforms (for example, Carsales.com.au, Facebook Marketplace, Drive.com.au and the Trading Post) will constrain Gumtree post-acquisition.

The ACCC documents included a summary of Gumtree’s assertion that the move was not likely to substantially lessen competition in the online auto media space because each of the platforms plays different roles in that space.

Referring to the potential impact on competition, the ACCC document said: “Gumtree submits that the proposed acquisition is unlikely to substantially lessen competition including because:

• The parties are not close competitors. Gumtree is focused on connecting buyers to private advertisers. CarsGuide/Autotrader is focused on connecting buyers to dealers.
• The parties account for a relatively small share of total market revenue from dealer classified advertising and private classified advertising. Carsales is the dominant provider and will impose a very strong competitive constraint on the merged entity. Facebook Marketplace is also a key competitor.
• There is a very real threat of new entry from established suppliers in other countries.
• Multi-homing (that is, using multiple platforms) by advertisers and potential buyers means that the cost of switching away from the merged entity will be low.”

The ACCC said that in terms of public benefits resulting from the purchase, Gumtree submitted the proposed acquisition will deliver positive benefits, including:

• Creating a stronger automotive classifieds platform that is better able to connect vehicle sellers and buyers. As the proposed acquisition will allow advertisers to cross-list on both platforms, it will increase the audience for advertisers and increase the inventory for potential buyers.
• Creating a stronger alternative automotive classifieds platform to Carsales and Facebook Marketplace for both advertisers and potential buyers.
• Allowing Gumtree to make further investments in its product, due to the improved scale and attractiveness of a combined Gumtree/Cox Media, which will improve the product experience for users.
• Allowing Gumtree to improve its service offering for advertisers, including through the development of dealer tools more comparable to those of Carsales.

The deadline for submissions expired on Monday, February 10.

By John Mellor