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Watchdog issues report

400 shops to be sold in Ladbrokes/Coral deal

LadbrokesLadbrokes and Coral may have to sell up 400 betting shops to satisfy watchdogs over their proposed merger.

The Competition and Markets Authority has provisionally found that the merger between Ladbrokes and Coral may give rise to competition concerns” in a large number of local areas”.

In order to resolve these concerns, it says 350 to 400 shops may have to be sold for the merger to be conditionally cleared.

Ladbrokes and Gala Coral Group are, respectively, the second and third largest bookmakers in the UK by number of shops, known as licensed betting offices. They also provide betting and gaming products online, ‘on-course’ at certain racecourses, and by telephone – as well as each operating two greyhound tracks.

Ladbrokes operates 2,154 betting shops in Great Britain and 77 in Northern Ireland and Coral operates around 1,850 betting shops in Great Britain.

The group of independent panel members investigating the merger has looked in detail at the large number of areas where Ladbrokes and Coralshops compete.

In a summary published today, the group has identified 659 local areas where it provisionally found that the merger may be expected to result in a substantial loss of competition, which could lead to a worsening of the offer made to customers at both a local and national level.

As well as its provisional findings, the group has asks for views on whether selling shops would be a suitable remedy. It also notes that, as many of the problematic local areas overlap, divestiture of a betting shop in one local area may also remedy the concerns in other areas.

The CMA has extended the deadline for its final report by eight weeks to 19 August  in view of the scope and complexity of the investigation which involves numerous local areas. The group, however, is aiming to publish its final report by the end of July.

The CMA has not found competition problems that may be expected to arise from the merger in relation to other parts of the 2 businesses.

Martin Cave, Inquiry Chair, said: “We’ve provisionally found that the merger between 2 of the largest bookmakers in the country may be expected to reduce competition and choice for customers in a large number of local areas.

“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.”

The full provisional findings report will be published shortly.

Photo: by Terry Murden (copyright)

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