Ladbrokes and Gala Coral’s request to have the investigation by the UK Competition and Markets Authority (CMA) into their planned merger fast-tracked has been granted, in order to give the body more time to investigate the effects of the new entity's enlarged betting shop estate on competition in the market.
The first phase of the investigation was launched by the CMA in December last year, with the authority issuing an invitation to comment, seeking views from industry stakeholders on the operators’ request to fast-track the process.
In order to have the process fast-tracked, the CMA must have evidence that the merger meets criteria that merits it being moved to the next stage.
Ultimately it decided that there was sufficient evidence for the investigation to be pushed forward, as the deal “gives rise to a realistic prospect of a substantial lessening of competition in relation to the supply of fixed odds betting products in LBOs in a large number of local areas where Ladbrokes and Coral overlap.”
“Although betting online has grown substantially in recent years, a significant proportion of customers continue to bet only in licensed betting offices (LBOs),” the authority said. “Accordingly, the CMA considers that the loss of competition between Ladbrokes’ and Coral’s LBOs in local areas where choice will be reduced to only one or two LBOs may lead to a worsening of their offer to customers.”
CMA executive director of mergers and markets Andrea Coscelli said: “As the second and third largest bookmakers in the country in terms of betting shops, the merger could affect competition in the very large number of areas where their shops overlap.
“As such it warrants an in-depth investigation so we can look in detail at these and other potential competition concerns,” he explained. “The fast-track request means that the inquiry group can now get started with that investigation.”
The merger has long been expected to see the operators forced to sell off a portion of their LBO estate in order to satisfy CMA requirements.
The concerns specifically focus around the supply of fixed odds betting in LBOs, meaning the CMA did not believe it necessary to reach a conclusion on other potential competition concerns in the first phase.
Such concerns will be examined during the in-depth phase 2 investigation, with third parties given the opportunity to present their views on the merger. The investigation will be overseen by an independent panel supported by a team of CMA staff, and must publish its final decision by June 24th this year.