Major British land-based and online gambling groups are in the media spotlight. Rank Group has bid to acquire the Gala Coral Group in compliance with British gambling laws, however, UK Office of Fair Trading (OFT) referred the case to the UK Competition Commission for further review.
The acquisition move made the United Kingdom gambling news last week. The official Office of Fair Trading statement, which followed soon thereafter revealed concerns over substantial competition reduction among online casinos in United Kingdom should the merger take place.
Gala Coral Group and Rank Group are two of the three giant casino operators in Britain, naturally, their merger means the creation of a single gambling superpower in the country. Should the deal go ahead, there will only be two major operators left in the UK – Rank and Genting, which could mean much worse deals for customers, according to the Office of Fair Trading.
The OFT also revealed reservations about the current high obstacles to entry and expansion on the casino market. These barriers are created mainly by the licensing regime currently in force, limiting other operators’ abilities to enter or expand on the market to compensate the reduction of competition caused by the merger.
Rank Group has already pledged to offer to take the necessary steps to avoid competition reduction. Among the proposed measures is the divestment of several casinos in various local areas.
Ali Nikpay, senior director at OFT responsible for this case, commented: “This merger would represent a major consolidation which could be expected to reduce competition, both locally and nationally. The high barriers to entry and expansion in the casino sector mean the loss of competition could potentially be irreversible.”
He went on to add: “As such, we believe it is appropriate that the Competition Commission reviews this merger in detail to ensure that the interests of consumers are protected.”
The Competition Commission is scheduled to review the case and report its findings by February 3, 2013.