The Competition and Markets Authority (CMA) has concluded that acquisition of Uni-Select by the LKQ Corporation (LKQ) could raise competition concerns in the supply of car parts and garage equipment.

A fast-track Phase 1 investigation by the CMA has confirmed that LKQ’s purchase of Uni-Select, which was announced in February, could raise competition concerns in the UK. 

LKQ, through Euro Car Parts, and Uni-Select, through GSF Car Parts, operate more than 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 centre 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. 

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.  

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.” 

She continued: “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.” 

More information can be found on the LKQ / Uni-Select case page. 

The companies are required to formally offer proposed remedies to the competition concerns within five 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 mitigations offered.

Parts distributor bought by LKQ

The CMA findings comes as LKQ also announce the acquisition of independent aftermarket commercial parts distributor Digraph, which specialises in HGV, coach and bus parts, announced it has been acquired by LKQ.

The deal sees Digraph join an expanded group of LKQ companies in the UK and Ireland alongside LKQ Euro Car Parts, LKQ Bodyshop and Arleigh Group.

LKQ made an initial investment in Digraph in 2017 and it has since provided strategic guidance and support as well working in partnership on procurement.

Digraph was founded in 1976 from a single Portakabin in West Hallam, Derbyshire, and today it operates 21 branches across the UK, making 300,000 deliveries annually to more than 4,000 customers.

Following the transaction, Digraph will be integrated into the enlarged LKQ UK and Ireland group, providing it with significantly enhanced buying power, with new investments planned in its people and systems.

The business will continue to operate as a separate legal entity under the Digraph brand. There will be no changes to its branch network.

James Rawson, Digraph’s CEO, has announced his intention to stand-down from the business on completion of the deal.

Andy Southby, currently managing director of the LKQ Bodyshop division in the UK and Ireland will assume responsibility of managing director of Digraph alongside his LKQ Bodyshop responsibilities.

Andy Hamilton, CEO, LKQ UK and Ireland Group, said: “Digraph’s expertise in heavy commercial vehicles, particularly that of its dedicated team of specialists based across its branch network, and its outstanding parts availability and delivery service gives our enlarged group unparalleled, quality coverage.

“We’re excited about how we can now work together to accelerate Digraph’s potential as we continue to strengthen and deepen LKQ UK and Ireland’s scale and capabilities.”

Rawson added: “LKQ has been an instrumental partner to our growth and success since 2017 and I know Digraph has a bright future as part of the group.

“I’m proud of every single one of our team and the role they have played in helping build Digraph into the largest independent commercial vehicle aftermarket parts distributor in the UK.

“Now it’s time for an exciting new chapter for the business with the power of the LKQ UK & Ireland group behind it.”

Sukhpal Singh Ahluwalia, who held a majority stake in Digraph, said that when he first looked at the Digraph business five years ago, he was immediately struck by its huge growth potential.

"At the time, there was a desperate need for a new national retailer of commercial vehicles parts across the UK that could offer customers a better range of parts at a more competitive price point,” he said.

"That is what we have achieved over the last five years, with the business now serving more customers than ever before.

“This success has been a direct result of the company's talented leadership team, and the business has clearly flourished under its CEO James Rawson and my partner in the business Neil Brown.”

He added: "I want to thank all the team for the fantastic job that they have done in scaling this business.

“Every member of the team, whether they work in our HQ, warehouses, or anywhere else, has been instrumental in its success, and it's something that everyone should be truly proud of.”

The deal marks Ahluwalia's most recent successful exit from a business in the UK autoparts industry. In 1978, Sukhpal Singh Ahluwalia founded car parts retailer Euro Car Parts from a single store before growing it into the largest car parts distributor in the UK and one of the largest in Europe. The business was sold to LKQ Corporation in 2011 for £280 million.