William Hill makes move to derail Lads-Gala Coral merger
Hills believes CMA should block merger for the very same reasons the proposed Ladbroke Coral merger was refused in 1998
The UK Competition and Markets Authority (CMA) should block the merger between Ladbrokes and Gala Coral for the same reasons a similar merger was halted almost two decades ago, William Hill has said.
In its submission to the CMA as part of the body’s phase two investigation into the proposed merger, William Hill said a combination of its rivals would lead to a “significant lessening of competition”, similarly to when the merger between the Ladbroke Group and Coral was rejected in 1998.
Ladbrokes and Gala Coral have previously argued the rise of online betting, plus increased LBO competition from the likes of Paddy Power and Betfred, meant a merger today wouldn’t have the same negative market impact as judged by the then Monopolies and Mergers Commission (MMC) 18 years ago.
However, in its submission, William Hill said that while there had been “many industry changes since the MMC blocked that transaction, it is important to recognise that the structure of the market has changed relatively little since 1998”.
The operator said the number of LBOs had remained relatively static in the intervening period while the online segment did not “impose significant constraints” on the retail division.
It argued that online represented a “discrete revenue base with material different pricing” and “different customer profiles” with only a small percentage of players using both retail and online products.
William Hill also explained that the make-up of OTC bets had changed significantly in recent years due to a growth in pre-priced football bets coupled with a reduction in horseracing wagers – the majority of which it said were placed at SP.
The operator said this shift meant customers were increasingly placing bets at odds compiled by the bookmaker rather than an independently determined SP and therefore any lessening of competition would have a greater impact on the punter today than would have been the case in 1998.
William Hill also said that, despite a suggested divestment of Ladbrokes and Coral shops, the combination would result in the removal of a “third national force”, a concern the MMC raised back in 1998.
Speaking to eGaming Review this morning, David Williams, Ladbrokes director of media, refused to be drawn on the detail of William Hill’s arguments but said the intervention had been one the operator had anticipated.
“It would have been more of a surprise had there not been a contribution,” Williams said. “It’s all part and parcel of the CMA process and we are continuing our work as planned,” he added.
Last month the CMA fast-tracked the proposed merger to a phase two investigation and said it would make its final decision on whether or not to give the green light to the merger on or before 24 June.