The Competition and Markets Authority has reversed its previous decision regarding Copart's acquisition of Hills Motors.
Initially, the CMA ruled that the acquisition could "substantially" reduce competition in the market. However, after conducting further investigations and considering new evidence, the CMA now believes that the merger does not pose competition concerns in the supply of salvage services.
Vehicle salvage and recycling group Copart acquired Hills Motors in July 2022 with the intention of expanding its 'green' vehicle parts offering.
In May, the CMA conducted an in-depth investigation and published an interim report highlighting concerns about competition in the supply of vehicle salvage services in the UK.
The report recommended that Copart should be required to divest the newly acquired business, based on evidence suggesting that Hills Motors was seen as a viable alternative to Copart by some customers.
However, the CMA later obtained additional evidence from customers indicating that Hills Motors' role in the market is less significant than previously thought. After careful examination of this new evidence, the CMA concluded that the constraint exerted by Hills Motors is weaker than initially believed, leading to the determination that the merger does not raise competition concerns in the supply of salvage services.
Copart currently holds a dominant position in the market, with limited competition for large national salvage contracts from insurance companies. Hills Motors, on the other hand, operates an in-house dismantling service and is a key supplier of recycled parts. It is among the few players invited to compete against Copart for these contracts.
Since the CMA had already dismissed competition concerns in other areas of the market, such as the supply of damaged and used vehicles or the supply of recycled parts in the UK, they have provisionally concluded that the deal should be cleared.
Kirstin Baker, chair of the independent panel of experts conducting the most recent 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.”