Car sellers will be squeezed for choice if Carsales.com's proposed deal with TradingPost goes ahead, the competition regulator has warned.
Australian Competition and Consumer Commission's chairman Rod Sims said the proposed acquisition would remove the Telstra-owned TradingPost as one of Carsales' "closest and most effective competitors".
"The Trading Post provides an alternative that is popular with dealers and private advertisers," Mr Sims said today.
"We are concerned the proposed acquisition would remove this choice."
Under the deal announced in August, Carsales planned to relaunch TradingPost.com.au using staff and infrastructure from its quicksales.com.au website.
The two websites would remain online as separate brands, with any item listed for sale on quicksales to also appear on TradingPost and vice-versa.
About 100 jobs at TradingPost were at risk should the deal proceed.
The ACCC statement of issues, published today, said some car dealers found the use of TradingPost combined with advertising on non-Carsales websites a "viable and competitive alternative" to the market-leading Carsales.
The regulator said it was concerned the proposed acquisition would remove a "significant competitor with an offer that is attractive to dealers and differs in important ways from the Carsales offer".
"Market participants have submitted to the ACCC that new entrants have been, and are likely to continue to be, unsuccessful in any attempt to match the inventory and audience size of Carsales or its smaller competitors Trading Post, Carsguide and Drive," the ACCC said.
"Accordingly, the proposed acquisition is likely to raise barriers to entry, further hindering the likelihood of competitors (including potential new entrants and existing market participants) being able to successfully challenge and constrain the position of Carsales."
The ACCC said it was seeking further feedback and expected to issue a final decision on November 29.
Telstra paid $636 million for TradingPost in 2004, but it has struggled to deliver for the telco as the likes of eBay gained in popularity.
At 12.20pm, Carsales was up seven cents at $7.90, while Telstra was up seven cents at $4.07.