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The Competition and Markets Authority (CMA) commenced its phase 1 investigation on 16 December 2015 and issued an invitation to comment, seeking views on the request for a fast track reference to an in-depth phase 2 investigation, which had been made by the companies.

For a case to be fast-tracked, the CMA must, at an early stage of its investigation, have evidence that the test for reference to phase 2 is met.

The CMA has found in its phase 1 investigation that the transaction meets the test as it gives rise to a realistic prospect of a substantial lessening of competition in relation to the supply of fixed odds betting products inLBOs 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 LBOs. Accordingly, the CMA considers that the loss of competition betweenLadbrokes’ 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.

Given 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.

These other concerns will be examined during the in-depth phase 2 investigation along with fixed odds betting in LBOs at a local level. Third parties will have an opportunity to present their views on the merger in relation to all these issues at an early stage 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 publish its final decision by 24 June 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.

Notes for editors

1. 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. From 1 April 2014 it took over the functions of the Competition Commission and the competition and certain consumer functions of the Office of Fair Trading, as amended by the Enterprise and Regulatory Reform Act 2013.
2. The Reference Test: under the Enterprise Act 2002 (the Act) the CMAhas a duty to make a reference to phase 2 if the CMA believes that it is or may be the case that a relevant merger situation has been created, or arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
3. Under the Act a relevant merger situation is created if 2 or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million (‘the turnover test’) or as a result of the transaction, in relation to the supply of goods or services of any description, a 25% share of supply in the UK (or a substantial part of the UK) is created or enhanced (‘the share of supply test’).
4. For the CMA to make a fast track reference to phase 2 it must, at an early stage of the investigation, have evidence objectively justifying a belief that the test for reference is met. In addition, fast track cases are likely to be cases where the competition concerns identified would impact on the whole or substantially all of the transaction, and not just one part (that could be resolved through structural undertakings in lieu of a reference).
5. All the CMA’s functions in phase 2 merger investigations are performed by inquiry groups chosen from the CMA’s panel members. The appointed inquiry group are the decision-makers on phase 2 merger investigations.
6. The CMA’s panel members come from a variety of backgrounds, including economics, law, accountancy and/or business; the membership of an inquiry group usually reflects a mix of expertise and experience (including industry experience).
7. The inquiry group may extend the 24-week period within which it is required to publish its report by no more than 8 weeks if it considers that there are special reasons why the report cannot be published within that period.
8. The full text of this decision will be placed on the case page as soon as is reasonably practicable.
9. Enquiries should be directed to Siobhan Allen (siobhan.allen@cma.gsi.gov.uk, 020 3738 6460) or Rory Taylor (rory.taylor@cma.gsi.gov.uk, 020 3738 6798).
10. 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 merger cases.