The Competition & Markets Authority (CMA) has referred Ritchie Bros’ planned £775m purchase of Euro Auctions for an in-depth phase two investigation.
Two week ago the CMA told the two companies that it had concerns and gave them the opportunity to address them. The firms offered undertakings to address the CMA’s competition concerns but the CMA does not believe that the proposals go far enough to address the issues.
Ritchie Bros and Euro Auctions are both auction service providers for used heavy equipment in the UK. During its initial investigation, the CMA found that the companies have a very high market share – more than 90% – in the supply of auction services for heavy construction machinery, with Euro Auctions being the clear UK market leader and Ritchie Bros the second largest provider.
The CMA also found that other auction providers were significantly smaller and other methods of sale (such as marketplaces, listing websites and dealers) did not compete with the companies on any meaningful level. The CMA is therefore concerned that the proposed deal could lead to a reduction in competition in the UK market, which could result in higher prices for customers and a lower quality service.
The phase two investigation must be completed by 1st September 2022, according to competition law.
CMA director David Stewart said: “Many businesses across the UK rely on Ritchie Bros and Euro Auctions to buy and sell heavy construction machinery in the UK. This merger would combine the two largest auction providers in this sector, risking higher commissions and lower service quality.
“We are not satisfied that the proposed undertakings from Ritchie Bros would fully address these concerns, which is why we are moving on to an in-depth phase two investigation.”
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