CMA clears Copart’s purchase of Hills following new evidence

The Competition and Markets Authority (CMA) has changed its mind about Copart’s acquisition of Hills Motors after originally ruling it could “substantially” lessen competition.

In May, following an in-depth investigation, the CMA found in an interim report that the merger raised competition concerns in the supply of vehicle salvage services in the UK and recommended that Copart be forced to sell the newly acquired business. 

In making that original decision, 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.

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.

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 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.”

Copart acquired Hills for an undisclosed sum, with plans to scale up its green vehicle parts offering, in July 2022.