CMA dismisses concerns Playtech will favour merged Lads Coral

The government department responsible for deciding whether the proposed Ladbrokes and Gala Coral merger can go ahead has batted away concerns Playtech could favour the merged entity in the supply of its products.

As part of its phase two investigation into the merger, the Competition and Markets Authority (CMA) said a third-party had raised a potential scenario whereby the supplier could focus on the enlarged firm at the expense of its other customers.

Playtech currently owns approximately 10% of Ladbrokes’ shares and intends to acquire shares in the merged entity should the transaction be given the go-ahead.

However, while the said it had CMA looked at the issue, it felt Playtech’s shareholding would not be of sufficient size to see it prioritise a Ladbrokes Coral to the detriment of its other customers and therefore would not form part of its phase two investigation.

“We are not currently minded to investigate this theory of harm further, as it would appear that, irrespective of whether Playtech may have the ability to completely or partially foreclose other betting and gaming operators, Playtech currently has no incentive to do so and its increased shareholding in Ladbrokes does not appear likely to change its incentives,” the CMA said.

“More specifically, based on the increased dividend revenue Playtech would achieve from an increased shareholding in Ladbrokes and the revenue it achieves from UK-based licensees other than the Parties, it would appear unlikely that an increased shareholding would provide Playtech with a sufficient incentive to engage in a foreclosure strategy in favour of the Merged Entity and to the detriment of its other UK customers,” it added.

Last month the CMA invited third-parties to submit their views on the proposed merger and interested parties still have until 18 February to do so.

The CMA said it would deliver its final decision on whether the merger can go ahead on or before 29 June 2016.