LKQ had previously announced its intention to divest Uni-Select’s GSF Cark Parts UK business as part of acquisition.
A fast-track Phase 1 investigation by the UK Competition and Markets Authority (CMA) confirmed July 21 that LKQ Corporation’s purchase of Uni-Select Inc. could raise competition concerns in the UK.
LKQ, through Euro Car Parts, and Uni-Select, through GSF Car Parts, operate over 400 depots between them in the UK. The companies supply car parts to independent garages and workshops and to larger national or regional customers, such as repair center chains, vehicle fleets and roadside assistance companies.
The CMA’s investigation found that the merger could reduce competition in the supply of car parts, as well as garage equipment, to independent garages and workshops in 145 local areas and the supply of car parts to national and multi-regional customers across the UK. The CMA also found that competition could be reduced in the supply of car parts to retail customers in 172 local areas.
According to the CMA, the merging businesses conceded that the deal could lead to a significant lessening of competition in these areas and have submitted a divestment proposal to restore the competition that would otherwise be lost in the UK as a result of the deal.
When the acquisition was announced in February, LKQ said it would undertake a process to divest GSF Car Parts UK.
Sorcha O’Carroll, CMA Senior Director of Mergers, said, “Early on, we identified that this deal could lead to higher prices and worse choice for customers across the UK. We will now carefully consider the proposal put forward by LKQ and Uni-Select which they believe could address our concerns, before deciding on the next step.”
Merging parties are required to formally offer proposed remedies, known as undertakings in lieu (UILs), within 5 working days after receiving the CMA’s Phase 1 decision and the CMA then decides, within 10 working days after the Phase 1 decision, whether to provisionally accept the UILs offered. The CMA then has 50 working days (subject to an extension of up to 40 working days) to consider whether to finally accept these remedies.
In a press release, Uni-Select announced that it and LKQ Corporation are currently reviewing the CMA’s decision and will promptly engage to formally submit the UILs.
If CMA approval is granted, it is anticipated that the acquisition will be completed during the third quarter of 2023.