ADESA announced Monday evening that it has decided not to participate in the remarketing industry’s currently proposed multiplatform system initiative.

ADESA said in a statement: “The company has worked for nearly two years with major industry partners and invested several million dollars in attempting to evaluate and develop an MPS that would benefit both sellers and buyers. Unfortunately, in light of the current competitive landscape, technology challenges and expected antitrust issues, ADESA has concluded it would not be prudent to further pursue this initiative.”

It added: “As currently structured, the proposed MPS would subject market participants to heightened technology requirements and expenditures. ADESA also believes the proposed MPS structure and its associated economic and governance model poses antitrust risks by raising new barriers to entry for smaller industry players, reducing competition among the auctions and increasing costs for sellers, buyers and ultimately retail consumers.”

Auto Remarketing spoke with Peter Kelly — president of the company’s Digital Services Group — for additional background and insight on the decision.

“First of all, after two years in and millions of dollars invested and working diligently with many of the industry partners here, we hadn’t been able to get all the parties to agree to a final MPS structure. So, that still remained an open item,” he said.

“The technology costs are very high — much higher than we forecasted going in — and just appear to be continuing on that upward trajectory. And ultimately those costs would have to be borne by participants, and ultimately, buyers and sellers,” Kelly continued.

“We were concerned that the MPS platform, as it was structured and the associated costs related to it, was creating some additional antitrust risks — raising costs for new participants to come into the industry, having a lessening effect on competition and creating that antitrust risk that would involve us in more costs and potential use of litigation down the line. And as we reflected on it,” he added, “the benefits commensurate with these costs and risks weren’t purely identified. We just felt that we had to make a decision, focus our technology investments on other areas where we believe there’s a higher and more impactful customer benefit in the near term.”

In the company’s statement, ADESA chief executive officer and president Stéphane St-Hilaire said: “We are committed to investing our resources to the benefit of our customers. As we have publicly stated, we are focused on enhancing technologies for our customers, expanding our geographic footprint and increasing our online buyer network, which supports both physical and online sales.”

Kelly emphasized as much in his discussion with Auto Remarketing, and he would go on to make this additional point about where KAR stands in regards to industry initiatives, in general.

“Notwithstanding this particular decision relating to MPS — I kind of view that as an industry initiative that we were just not able to get to finality on with certain industry participants — we remain very committed to industrywide initiatives, in general,” Kelly said.

“We’re involved in many of them, whether it’s the NAAA, IARA, AutoIMS, AuctionNet, AutoGrade, AuctionACCESS. So, we’re very committed to the industry and to industrywide initiatives that bring real and tangible value to the customer,” he added. “We just weren’t able to get there on this particular initiative.”