An in-depth investigation by the Competition and Markets
Authority (CMA) has provisionally found that the completed
acquisition by Copart of Hills Motors could result in a
substantial lessening of competition in the market for the supply
of salvage services in the UK.
Copart and Hills Motors both supply vehicle salvage services.
This involves collecting damaged and other used vehicles on
behalf of customers – including insurance companies, finance
companies and rental car companies – and remarketing them for
sale via online auction or, in some cases, managing their
dismantling or scrapping. Hills Motors is active in vehicle
dismantling whereas Copart is not.
The CMA referred the deal to an in-depth Phase 2 inquiry
after identifying competition
concerns in the supply of salvage services, salvage
vehicles and recycled (‘green’) parts during its initial, Phase
1, investigation. Over the past 5 months, an independent CMA
panel has gathered and examined a wide range of evidence to
better understand the markets and potential impact of the deal.
This included holding site visits and hearings with Copart and
Hills Motors, extensive engagement with customers and
competitors, analysis of tender and other opportunities data
submitted by the merger parties and third parties and analysis of
the merger parties’ internal documents.
Following this further investigation, the CMA has now
provisionally found that allowing Copart to purchase Hills Motors
could substantially lessen competition in the market for the
supply of salvage services in the UK. Copart is currently the
market leader by a significant distance. Hills Motors, which has
an in-house dismantling service and is an important supplier of
recycled parts, is one of a small number of players in the market
for salvage services that have a track record of successfully
competing for and servicing large national salvage contracts for
insurance companies.
The CMA has provisionally dismissed concerns that the merger
would substantially lessen competition in the supply of damaged
and other used vehicles or the supply of recycled parts in the
UK.
Kirstin Baker, chair of the independent panel of experts
conducting this Phase 2 investigation, said:
Vehicle insurance is a significant cost for many individuals and
businesses and there is increasing demand for insurers to
minimise their environmental impact, while keeping prices low.
There are very few salvage companies who have a track record of
servicing large national contracts for insurance companies, so we
are concerned this deal could reduce the options for customers
and this could lead to higher prices or lower quality services.
We invite views on both our provisional findings and the possible
remedies we have identified to address our concerns.
The CMA has published a notice of
possible remedies with a deadline for comments by 19 May
and asked for any interested parties to make submissions on its
provisional findings by 26 May 2023. The statutory deadline for
the CMA’s final report is 20 July 2023.
For more information, visit the Copart/Hills
Motors case page.
