The CMA has decided that Ladbrokes and Coral must sell around 350 to 400 shops in order to obtain clearance for their merger.
26 July 2016
Ladbrokes plc (Ladbrokes) and Gala Coral Group Limited (Coral) are, respectively, the second and third largest retail bookmakers in the UK by number of betting shops, known as licensed betting offices. They also provide betting and gaming products online and by telephone and ‘on-course’ betting at certain racecourses, as well as each operating 2 greyhound tracks.
Ladbrokes operates around 2,150 betting shops in Great Britain and 77 in Northern Ireland and Coral operates around 1,850 bettting shops in Great Britain.
Having considered responses to its provisional findings published in May and further analysed the evidence, the group of independent panel members investigating the merger has, in a summary of the Competition and Markets Authority’s (CMA) final report, identified 642 local areas where it may be expected to result in a substantial lessening of competition. The summary states that the merger could lead to a worsening of the offer made to customers at both a local and national level.
To address these concerns and preserve competition for the benefit of customers in these local areas, Ladbrokes and Coral must sell around 350 to 400 betting shops to one or more suitably qualified up-front buyers, which must be approved by the CMA. As many of the problematic local areas overlap, the sale of a betting shop in one local area may also remedy the competition concerns in the overlapping area.
The sales must be substantially completed before the merger can go ahead.
Martin Cave, Inquiry Chair, said:
"We’ve found that the merger between 2 of the largest bookmakers in the country would reduce competition and choice for customers in a large number of local areas.
"For these customers, competition comes from the choice of shops in their local area and they would lose out from any reduction of competition and choice. Discounts and offers of free bets to individual customers are 2 of the ways betting shops respond to local competition which could be threatened by the merger. Such a widespread reduction in competition at the local level could also worsen those elements that are set centrally, such as odds and betting limits.
"Although online betting has grown substantially in recent years, the evidence we’ve seen confirms that a significant proportion of customers still choose to bet in shops - and many will continue to do so after the merger. We therefore believe that a sale of shops of this scale is needed to protect these customers.
"We require Ladbrokes/Coral to sell around 350 to 400 betting shops to a suitable purchaser - or purchasers - in order to ensure that customers continue to benefit from competition in those local areas. It is now for the parties to propose a divestment package and one or more suitable purchasers for the CMA to approve."
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.
- The Ladbrokes/Coral inquiry group consists of Martin Cave (Inquiry Chair), John Harley, Andrew Popham and Gavin Robert.
- The CMA referred the merger for an in-depth phase 2 investigation in January 2016, having fast-tracked the reference at the request of the companies.
- All the CMA’s functions in phase 2 merger inquiries are performed by independent inquiry groups chosen from the CMA’s panel members. The appointed inquiry group are the decision-makers on phase 2 inquiries.
- The CMA’s panel members come from a variety of backgrounds, including economics, law, accountancy and business; the membership of an inquiry group usually reflects a mix of expertise and experience (including industry experience).
- For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on mergers cases.
- Enquiries should be directed to Rory Taylor (firstname.lastname@example.org, 020 3738 6798).
Source: Gov.uk (Contains public sector information licensed under the Open Government Licence v3.0.)