The UK competition regulator, the CMA, is reviewing a plan put forward by US-based LKQ and Canada-based Uni-Select to address concerns that the supply of car parts and garage equipment in the UK could see a loss of competition if LKQ’s purchase of Uni-Select goes ahead.
A recently concluded fast-track Phase 1 investigation by the Competition and Markets Authority (CMA) confirmed that LKQ Corporation’s purchase of Uni-Select Inc could raise competition concerns in the UK.
In February 2023, LKQ agreed with Uni-Select to acquire all its outstanding shares in a deal valued at $2,057.41m (£1,584.12m), GlobalData reported.
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 larger national or regional customers such as repair centre chains, vehicle fleets and roadside assistance companies.
The regulator’s investigation found that the merger could reduce competition in the supply of car parts and 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.
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LKQ Uni-Select solutions
The CMA said the merging businesses conceded the deal could lead to a significant lessening of competition in these areas and submitted a divestment proposal to restore the competition that would otherwise be lost in the UK as a result of the deal.
Under UK law, merging parties must formally offer proposed remedies within five working days after receiving the CMA’s Phase 1 decision. The CMA then decides, within ten working days, whether to provisionally accept the proposed solutions.
Sorcha O’Carroll, CMA Senior Director of Mergers, said: “Drivers have already been paying 6 pence per litre more for their fuel than they would usually expect to. We are concerned that this transaction could further increase costs to people and businesses.
“Early on, we identified that this deal could lead to higher prices and worse choices 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.”
Meet the parents
Uni-Select Inc, a distributor of automotive refinish and industrial paint and related products is a Canadian-headquartered company listed on the Toronto Stock Exchange and operates primarily in the US, Canada and the UK.
LKQ Corporation, a provider of alternative vehicle collision replacement products and alternative vehicle mechanical replacement products, is a US-headquartered company listed on NASDAQ. It has global business divisions in North America (the US and Canada) and Europe.