The Competition and Markets Authority has blocked auctioneer and breaker Copart from merging Skelmersdale-based Hills Motors into it’s business.
The deal had been announced in July included Hills’ main 25-acre site in Skelmersdale, a recently acquired yard in Scotland and a parts hub in Gloucestershire. The transaction was also to include all assets, such as vehicles and cranes. Significantly, Hills ‘Green Parts Specialist’ brand was included, which Copart had planned to retain and build on.
However, the CMA’s investigation has found that Copart and Hills Motors were among a few in the business with national contracts for salvage services and they competed for the same contracts. Investigators concluded that Copart and Hills Motors are close competitors, and the transaction could lead to a loss of competition in the supply of salvage services and salvage vehicles.effect of the transaction on the supply of green parts.
Another consideration was the number of cars with reusable parts available to the market. Copart previously had no dismantling capability but was one of the largest suppliers of cars to dismantling businesses. Since acquiring Hills Motors, the CMA are of the opinion that Copart could decide to restrict the number of salvage vehicles with reusable parts available on its auction platform and instead have Hills Motors dismantle them.
Sorcha O’Carroll, Senior Director of Mergers at the CMA, said: “Our investigation showed that Copart’s purchase of Hills Motors takes out an important player in the vehicle salvage services industry and that few competitors would be left in the market. The transaction could also make it more difficult for green parts suppliers to purchase the vehicles they need, which would reduce competition in that market”.
Copart has five working days to submit proposals to address the CMA’s competition concerns. The CMA would then have a further five working days to consider whether to accept these in principle instead of referring the case to a Phase Two investigation. However, these second phase investigations can be lengthly, as seen in the Euro Car Parts/Andrew Page case in 2018.
CAT has approached Copart for comment.