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Constellation’s takeover of Aston Barclay has been plunged into further doubt after the Competition and Markets Authority (CMA) referred the case for a ‘phase two investigation’.
Car Dealer reported in April that the two auction giants had struck a deal which would see Aston Barclay join BCA in the Constellation stable.
However, within weeks, the CMA announced that it had served an enforcement order under section 72(2) of the Enterprise Act 2002.
The move meant that an inquiry into the buyout was required, with a verdict expected to be announced yesterday (Oct 13).
However, rather than delivering its decision, the watchdog declared that the acquisition now requires further investigation and referred the case for a ‘more in-depth investigation’.
In a post on the Government website, the agency confirmed: ‘The CMA has referred the completed acquisition by Constellation Developments Limited of ABVR Holdings Limited for an in-depth investigation, on the basis that, on the information currently available to it, it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.’
The news could represent a hammer blow to the two firms’ hopes of rubber stamping the deal. If the CMA finds that a ‘substantial lessening of competition’ has occurred, it has the power to block the acquisition from being finalised.
Explaining the rationale behind the latest development, the CMA said: ‘BCA and Aston Barclay compete closely for similar customers across GB, both offering large-scale used vehicle auctions and having a broad geographic reach.
‘Constellation’s acquisition of Aston Barclay significantly increases its already strong market position. Aside from one supplier, other competitors only exert a limited competitive constraint on BCA, given their smaller scale and more limited geographic coverage.
‘Having conducted a phase 1 merger investigation, the CMA is concerned the merger may reduce competition, potentially leading to higher prices and/or a reduction in choice for customers using used vehicle auction services, with a subsequent impact on the prices consumers pay for used vehicles.’
Going forward, the two outfits must continue to carry out their business separately to one another with individual brand identities retained.
The firms are also still banned from making changes to their organisational structure without written permission from the CMA.
The restrictions mean that all of the businesses’ assets must be maintained and preserved, and cannot be disposed of, with key staff also banned from moving between Aston Barclay and Constellation.
The CMA also confirmed that two other interested parties have expressed interest in acquiring Aston Barclay, in the place of Constellation.
However, while the interest remains ‘active’ the government agency has admitted that both parties are ‘significantly smaller’ than Aston Barclay Constellation.
BCA is currently the largest used car auction group in the UK and the acquisition would add five new auction locations, including Aston Barclay’s two mega centres in Wakefield and Donnington Park.
It is part of Constellation Automotive Group, which also owns We Buy Any Car, Cinch, CarNext and Marshall among other car buying and owning platforms.
A management buyout of Aston Barclay took place in 2017 with Rutland Partners investing millions of pounds in the business.
The full announcement can be found here.
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English (US) ·