In July 2017, Trade Me sought clearance to acquire up to 100 percent of the shares in Limelight Software Limited, trading as Motorcentral. The Commerce Commission has declined this clearance.
Motorcentral is a Christchurch-based supplier of motor vehicle dealer management software. In making its decision for the decline, the Commerce Commission says it considered the effects of the merger on competition.
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.”