CMA says Ladbrokes-Gala Coral deal may hinge on shop sales

20 May 2016

The UK Competitions and Markets Authority (CMA) has provisionally ruled that the proposed merger between Ladbrokes and Gala Coral may cause competition concerns in a large number of local areas.

First mooted in June of last year, should the deal go through it would lead to the creation of a combined operation worth £2.3 billion (€3 billion/$3.4 billion).

However, the proposed merger has come under fire from rival operators which have claimed that the deal could lead to issues regarding competition within the UK gambling markets.

The CMA, which was appointed to scrutinise the deal, has now issued its provisional findings, stating that as many as 400 shops may have to be sold in order for the agreement to go through.

Ladbrokes currently operates 2,154 betting shops in Great Britain and Northern Ireland, while Gala Coral has a network of 1,850 retail sites.

The CMA said it has identified 659 local areas in which the merger could lead to a loss of competition, which could in turn lead to a “worsening of the offer made to customers at both a local and national level”.

The regulator did not identify any other concerns in terms of competition.

The body, which said a remedy must meet their concerns in order for the deal to go ahead, has also extended the deadline for its final report by a further eight weeks to August 19, although the concluding report could be published by the end of July.

Martin Cave, inquiry chair at the CMA, said: “Although online betting has grown substantially in recent years, the evidence we’ve seen confirms that a large number of customers still choose to bet in shops - and many would continue to do so after the merger.

“For these customers, competition comes from the choice of shops in their local area and it’s they who could lose out from any reduction of competition and choice.

“Discounts and offers of free bets to individual customers are ways betting shops respond to local competition, which could be threatened by the merger.

“We’re also concerned that such a widespread potential reduction in competition at the local level could worsen those elements that are set nationally such as odds and betting limits.

“We’ll now consider responses to our provisional findings before coming to a final decision.

“If our provisional findings are confirmed and divestiture would be a suitable remedy, Ladbrokes/Coral may have to sell a large number of shops to a suitable purchaser or purchasers in order to preserve competition in those local areas.

“We’ll need to look closely at the exact number of shops and areas that would be involved - the overall size and complexity may mean that the sales need to be substantially completed before the merger can go ahead.”

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