The Competition and Markets Authority (CMA) has raised concerns that BCA’s acquisition of SMA Vehicle Remarketing could restrict competition in Newcastle.
BCA bought SMA in June for £43m with the purchase immediately being referred to the CMA. The deal saw BCA, which already operated 17 centres, acquire five additional sites in Kinross, Edinburgh, Birmingham, Leeds and Newcastle.
While the CMA ruled that BCA faces “strong competition” from other auctioneers across four of these sites, it raised concerns over Newcastle.
“In the Newcastle area, the CMA found that BCA and SMA were close competitors, and that following the merger the merged entity will face competition from only one other physical auction site,” it said in a statement issued today.
“The CMA has therefore found that the merger may lead to higher prices or a reduction in choice or quality of service for customers of used vehicle auction services at physical auction sites in the Newcastle area.”
The CMA added that BCA’s acquisition of SMA faces an “in-depth merger inquiry unless it offers a solution to competition concerns in car auctions in Newcastle”. It is understood that a possible solution would be for BCA to sell the site to avoid a Phase 2 investigation.
Mike Allen, director of Zeus Capital, BCA’s joint broker said: “We note the announcement from the CMA regarding the acquisition of SMA Vehicle Remarketing. The upshot is that BCA will be required to sell its site in Newcastle on competition grounds to a competitor of its choice. We believe this is a very positive outcome, and will allow management to integrate the rest of the business.”
BCA has until 24 November to respond to the CMA.
