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The United Kingdom’s largest bookmaker, William Hill, has launched a protest with UK business regulators in an attempt to short-circuit the planned merger of the UK’s second- and third-largest books, Ladbrokes and Gala Coral, which was announced last July. The combined Ladbrokes Coral, as the new firm is scheduled to be called, would create a firm larger than Bill Hill and put the combined firm at the top of the UK’s bookmaking heirarchy.
It’s not the first time that William Hill has attempted to intervene in a proposed merger between Laddies and Coral, and the first time such a merger or acquisition was proposed, William Hill succeeded. That was back in 1998, when Laddies wanted to scoop up the then-smaller Gala Coral, and William Hill successfully argued that the deal was anti-competitive and would harm the UK’s betting consumers.
The same argument from William Hill is back in play this time around. In December, attorneys for the company sent a letter protesting the planned merger to the UK’s Competition and Markets Authority (CMA), and followed that up with a lengthier submission in mid-January detailing their latest complaint. That submission has only become publicly available in recent days, and it’s triggered a small handful of news reports, since whoever wins in the tiff gets to be the big dog in the UK betting scene for at least the next few years.
“Despite changes in the LBO sector, as well as the emergence of online,” reads one element of the recent William Hill submission, “a LB/GCG [Ladbrokes / Gala Coral Group] merger would still give rise a substantial lessening of competition, just as it would have done in 1998.”
That’s the main thrust of the William Hill argument here, that by allowing the #2 and #3 UK bookmakers to combine, the UK would lose that prominent third-place book, which was one of the things cited back in 1988 by UK business regulators as a vital part of the country’s overall protection for consumers. “Whilst there have been many industry changes since the MMC blocked that transaction,” the statement continued, “it is important to recognise that the structure of the market has changed relatively little since 1998.”
The recent submission continued to attempt to strengthen its case by reminded the CMA of the 1998 decision, quoting a section of the MMC’s findings from then and arguing that they still apply today:
5 Much of the MMC’s original reasoning therefore remains valid. In particular:
(a) There is “an important national component to competition in the provision of offcourse betting services through pricing and through branding and quality of outlet”;
(b) The merger has the effect of removing Coral (now GCG), which the MMC considered to have been an important third national competitive force in the market. In particular it would:
(i) “lead to a weakening of price competition, actual and potential, at national level to the detriment of punters”; and
(ii) “have a dampening effect on innovation and reduce punters’ choice of major LBO chains”;
(c) “the adverse effects can only effectively be remedied by restoring an industry structure which is conducive to the development of competition”.
… Or, in other words, William Hill hopes, by the CMA putting the kibosh to the planned merger.
It is true that the number of LBOs (licensed betting offices) in the UK has remained almost static over the past two decades; in 1998 there were 8,983 such outlets, according to the William Hill submission, while last year that number was almost the same, at 8,958. Yet in order to win its argument this time around, William Hill must minimise the impact that online-betting availability has had upon the entire UK and European betting scene.
In its recent submission, William Hill argues that despite its continuing dominance, online numbers ought to be downplayed in the interest of consumer protection. William Hill’s submission even cites a 2012 CMA report on that year’s Gala-Rank merger, where at that time the CMA wrote that “there is insufficient evidence for online gaming to be considered a sufficiently strong constraint on bricks and mortar casinos to warrant inclusion in the product scope.”
Whether that still applies today remains to be seen. Today as much as 85% of all betting business is conducted online, and the true market for UK punters is European Union-wide, meaning that they can choose to bet with dozens of reputable European books, rather than just the small handful of prominent UK firms that dominated the scene two decades ago. While the UK’s LBO count remains constant, it’s more a shell of convenience. Right now William Hill finds it convenient that a count of those outlets should be the truest measure of whether the proposed Ladbrokes – Coral merger should be approved, though the industry has moved well past that point in the intervening years.
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