Telstra's online auto deal quashed over competition
Under the deal announced in August, carsales.com.au planned to relaunch TradingPost.com.au using staff and infrastructure from its quicksales.com.au website.
The two websites would remain online as separate brands, with any item listed for sale on quick-sales.com.au also to appear on TradingPost and vice-versa.
About 100 jobs at TradingPost would have been cut had the deal proceeded.
However, the Australian Competition and Consumer Commission blocked the deal on Thursday, saying it was likely to remove a close and effective competitor of carsales.com.au.
"Trading Post is a well-established and high-profile brand for automotive classifieds advertising and provides an important competitive constraint on carsales," the ACCC chairman, Rod Sims, said in a statement.
"The proposed acquisition would significantly increase carsales' market power and competition would be substantially reduced to the detriment of automotive dealerships and private advertisers." The ACCC's statement of issues, released in October, had already raised concerns about the deal.
The chief executive of carsales, Greg Roebuck, called the decision disappointing and said the combination of quicksales and TradingPost would have brought "much needed competition to the general classifieds and auction space".
"In recent years the general classifieds and auction space has been increasingly dominated by a single overseas-owned operation," Mr Roebuck said.
"In association with quicksales.com.au, a revitalised TradingPost would have delivered stronger choice to consumers and businesses alike, as well as keeping taxes and employment in Australia."
In 2004, Telstra paid $636 million for the Trading Post Group, which at that time included newspaper publications and a number of websites.
However, the investment struggled to deliver, as auctions sites such as eBay gained in popularity.
Telstra opened the TradingPost website to online auctions in 2008, and closed the Trading Post classifieds newspaper in 2009.
It has also written down about half of TradingPost's book value.
Frequently Asked Questions about this Article…
The Australian Competition and Consumer Commission (ACCC) blocked the proposed deal on the grounds it was likely to remove a close and effective competitor to carsales.com.au, putting the future of Telstra's Trading Post under a cloud.
The ACCC said the acquisition would significantly increase carsales' market power and substantially reduce competition, which would be detrimental to automotive dealerships and private advertisers. It described Trading Post as an important competitive constraint on carsales.
Under the announced plan, carsales.com.au would have used staff and infrastructure from its quicksales.com.au site to relaunch TradingPost.com.au. Both websites were to remain separate brands, with listings cross-posted so items on quicksales would also appear on Trading Post and vice versa.
About 100 jobs at Trading Post would have been cut had the deal proceeded, according to the announcement tied to the proposed arrangement.
Carsales CEO Greg Roebuck called the decision disappointing, arguing the quicksales–Trading Post combination would have brought much-needed competition to the general classifieds and auction space, delivered stronger choice to consumers and businesses, and kept taxes and employment in Australia.
Telstra bought the Trading Post Group in 2004 for $636 million. The investment struggled as auction sites like eBay gained popularity. Telstra opened the Trading Post website to online auctions in 2008, closed the classifieds newspaper in 2009, and has written down about half of Trading Post's book value.
The ACCC described Trading Post as a well-established, high-profile brand that provides an important competitive constraint on carsales, implying its removal as a strong competitor would harm market competition.
The article says the decision puts the future of Telstra's Trading Post under a cloud and prevents carsales from expanding via quicksales and Trading Post. It notes job cuts would have occurred and highlights past write-downs of Trading Post's value, but it does not provide information on share-price effects—investors should look for official company updates and market commentary for further impact analysis.
Call 1300 880 160
Start a chat
Schedule a call
