With the Covid pandemic, auctions for arts, antiques and other high-value goods, such as industrial machinery, have rapidly moved online. One of the key facilitators of this shift has been Auction Technology Group plc (ATG), which supplies auction houses in the UK and abroad with access to its online bidding platforms. Last month, ATG announced plans to buy one of North America’s major online auction platforms, LiveAuctioneers, and this week the Competition & Markets Authority (CMA) said that it would be taking a closer look at the deal.
Online bidding platforms – such as ATG’s thesaleroom.com – let auction houses include both on-site and online bidders in their auctions. Auction houses like online bidding platforms as it lets them access a much wider group of potential buyers, while buyers using these platforms benefit from convenient access to sales at multiple auction houses.
ATG comes to the CMA’s attention
ATG, which started out in the 1970s as the Antiques Trade Gazette, has built up a strong position in the UK market. So strong that, in 2016, competitors complained to the CMA that ATG was taking advantage by: (i) requiring exclusivity from auction house customers, (ii) insisting on receiving terms from auction houses that were no less favourable than its competitors and/or (iii) restricting auction houses from advertising or promoting offers from ATG’s competitors. While not conceding that it had done anything wrong, ATG gave a commitment to the CMA in 2017 that it would no longer include these terms in its customer contracts.
Having got onto its radar, the CMA called-in ATG’s 2018 acquisition of the European auction platform Lot-tissimo for review. However, the CMA quickly cleared the deal once it found that UK collectors did not use the Lot-tissimo platform to any significant degree, and that Lot-tissimo did not have any plans to expand into the UK to compete more directly with ATG. The CMA’s clearance was no doubt helped by the fact that in 2017, when looking into complaints about ATG’s behaviour, it had identified seven other competitors to ATG, none of which were Lot-tissimo.
Industry consolidation continues
In 2018, three of ATG’s UK competitors – UK Auctioneers, BidonThis and The Auction Room – merged to create the UK’s second largest auction platform, working with 15% of the UK’s auction houses.
Further consolidation followed in early 2020 when the private equity firm TA Associates, acquired both ATG and Proxibid, another of ATG’s seven UK competitors (as identified by the CMA in 2017).
Neither transaction was formally reviewed by the CMA.
CMA review of ATG / Live Auctioneers
So now we reach 2021. The seven competitors to ATG that the CMA identified in 2017 have consolidated down to four:
- BidonThis/UK Auctioneers/The Auction Room (BoT/UKA)
- Easy Live Auctions
- Invaluable and
- Live Auctioneers.
ATG’s plan to buy Live Auctioneers will reduce the number of competitor online auction platforms to three (assuming there has been no significant new entry since 2017).
It is easy to see ATG having some challenges in getting the Live Auctioneers acquisition past the CMA, especially given the CMA’s well publicised concerns about consolidation in digital markets. Much will depend on the strength of the competition offered by BoT/UKA, Easy Live Auctions and Invaluable.
If the CMA concludes that ATG’s acquisition of Live Auctioneers is likely to reduce competition, a solution may not be easy to come by. Typically, we might expect the CMA to require the sale of Live Auctioneer’s UK business so that it can continue competing with ATG in the UK, while allowing ATG to buy Live Auctioneer’s much larger North American business.
However, whether such a solution will work here depends on Live Auctioneers having a viable UK business to divest. Assuming Live Auctioneers can, technically, split its platform into separate US and UK sites, there will be a question over whether UK auction houses will keep using the divested Live Auctioneers’ UK site once it is no longer connected to the pool of US buyers that came with Live Auctioneers’ ownership. It is easy to imagine buyers and auction houses deserting the divested business in favour of larger platforms, such as ATG’s. In other words, divesting the UK business may not be effective in maintaining the number of competitors to ATG.
More fundamentally, the CMA will need to consider whether fewer online auction platforms is actually a problem given the potential benefit to auction houses and collectors from accessing a wider pool of sales on a single site. It will be an interesting test of the CMA’s get tough approach to consolidation in digital markets.