Ladbrokes and Gala Coral may have to wait some time before the operators can complete their merger, after the Competition and Markets Authority (CMA) ruled in its provisional findings that 350 to 400 shops may have to be sold, due to competition concerns.
The CMA has only confirmed what was already perceived to be the case – that the size of the enlarged group’s retail division would be the biggest stumbling block in the way of the completion of the merger and that some shops may have to be sold.
However, the CMA has at least given some ballpark figures as to the number of shops that the group could be required to sell.
A total of 659 local areas have been identified as areas where the merger may create a substantial loss of competition.
A final report will be published by the CMA, which has extended its deadline by eight weeks to 19 August and will aim to publish the report by the end of July.
No other problems regarding the merger have been flagged by the CMA.
Ladbrokes operates 2,154 UK betting shops, while Coral owns 1,850 shops in the country, and the provisional findings stated: “The evidence available to us indicated that LBOs compete more strongly the closer they are to each other geographically and that, as such, distance is generally a good proxy for the strength of competitive constraint. More specifically, we found that the competitive constraint one LBO exerts on another LBO diminishes sharply as the distance between them increases.”
Martin Cave, inquiry chair, said: “We’ll now consider responses to our provisional findings before coming to a final decision. If our provisional findings are confirmed and divestiture would be a suitable remedy, Ladbrokes/Coral may have to sell a large number of shops to a suitable purchaser or purchasers in order to preserve competition in those local areas. We’ll need to look closely at the exact number of shops and areas that would be involved - the overall size and complexity may mean that the sales need to be substantially completed before the merger can go ahead.”
Plans for the Ladbrokes Coral merger were first announced in July.
