New evidence gathered by the Competition and Markets Authority (CMA) following its provisional findings has now led it to provisionally conclude that the deal would not lead to competition concerns.
In May 2023, an independent CMA panel provisionally found that allowing Copart to purchase Hills Motors has resulted or may be expected to result in a substantial lessening of competition in the market for the supply of salvage services in the UK.
Copart is currently the market leader by a significant distance and faces few competitors for large national salvage contracts for insurance companies. Hills Motors, which has an in-house dismantling service and is an important supplier of recycled parts, is one of the small number of players that have been invited to compete against Copart for such contracts.
In its original provisional findings, the CMA panel had taken account of evidence indicating that Hills Motors was considered a credible alternative to Copart by some customers for such contracts. However, since publication of its original provisional findings, the CMA obtained new evidence from customers suggesting that the role that Hills Motors plays in the market is less significant. Having tested this new evidence thoroughly, the CMA now considers that the constraint exercised by Hills Motors is materially weaker than it previously believed, and that the merger does not give rise to competition concerns in the supply of salvage services.
As competition concerns in other services (the supply of damaged and other used vehicles or the supply of recycled parts in the UK) were provisionally dismissed in the original provisional findings, the CMA has now provisionally concluded that the deal should be cleared.
Kirstin Baker, chair of the independent panel of experts conducting the Phase 2 investigation, said:
We've gathered new evidence which means we no longer consider that this deal raises competition concerns in the vehicle salvage sector.
We conduct these thorough investigations to fully understand issues affecting competition in that market. The purpose of the provisional findings stage is to gather responses and review the evidence before we make a final decision.
In some cases, new evidence comes to light which causes us to change our mind as we have done here.
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