UK competition regulator fast-tracks Ladbrokes/Coral merger to phase 2 investigation

The UK Competition and Markets Authority (CMA) today referred the proposed merger of gaming and betting provider Ladbrokes PLC (LON:LAD) and certain businesses of Gala Coral Group Limited, including Coral Retail, Eurobet Retail and Gala Coral’s online businesses for an in-depth phase 2 investigation.

The CMA started its phase 1 investigation on December 16, 2015 and issued an invitation to comment, asking for opinions on the request for a fast track reference to an in-depth phase 2 investigation.

The CMA noted today that Ladbrokes and Coral are, respectively, the second and third largest bookmakers in the UK by number of shops, known as licensed betting offices (LBOs). They also provide betting and gaming products online, ‘on-course’ at certain racecourses, and by telephone – as well as each operating 2 greyhound tracks.

The CMA has found in its phase 1 investigation that the transaction meets the test for reference to phase 2 as it implies 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.

The regulator considers that the loss of competition between Ladbrokes’ and Coral’s LBOs in local areas where choice will be cut to only one or two LBOs may lead to a worsening of their offer to customers.

CMA_Logo_01Given that the criteria for a fast track reference were met on the basis of the supply of fixed odds betting in LBOs in local areas, it was not necessary for the CMA to reach a conclusion at phase 1 in relation to any other potential competition concerns raised by the merger.

Third parties will have an opportunity to present their views on the merger during the phase 2 investigation, which will be overseen by a group of independent panel members supported by a case team of CMA staff.

The group must announce its final decision by June 24, 2016.

Andrea Coscelli, CMA Executive Director of Markets and Mergers and decision-maker in this case, 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. The fast-track request means that the inquiry group can now get started with that investigation.”

You can view the CMA announcement by clicking here.

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