Competition issues cause UK CMA to call for ‘Phase 2’ investigation of Novomatic Talarius buyout

£116 million acquisition of Talarius arcades by Novomatic Group which would see Novomatic taking control of 169 additional adult gaming centres, has been hit with an in-depth investigation over competition concerns by the UK Competition & Markets Authority (CMA).

In an industry update, CMA officials specified that following Novomatic’s acquisition of Talarius the company would operate a total of 264 adult gaming centres which may harm competition conditions for the sector.

The CMA detailed that Novomatic, who also operate Admiral and Noble arcades, would be unlikely to face competition from other adult gaming centres, licensed betting offices or bingo halls in five UK areas.

June 2015 saw Tatts Group sell its UK division of Talarius, the Quicksilver arcades operator, to Novomatic for A$210 million.

The CMA has decided to refer the merger for a phase 2 investigation by an independent group of CMA panel members unless Novomatic offer acceptable undertakings to address competition concerns by 4 November 2016.

A phase 2 investigation would grant the CMA at least 24 weeks, potentially 32, to conduct its investigation and publish a report focusing on the parties concerned and interested third parties. This could result in legally binding undertakings imposed on Novomatic by the CMA to clear the merger.

Sheldon Mills, CMA Senior Director of Mergers and decision maker in this case, said: “In most of the local areas where Admiral or Noble and Quicksilver gaming centres compete, we found that there were other competing gaming centres as well as some competition from betting shops and bingo halls with gaming machines which compete with those in a gaming centre. Overall, we found that these combined alternatives would push Novomatic to keep offering a competitive service to its customers.”

“However, in 5 local areas we considered that there would be a significant loss of competition which could harm the quality of service offered to players. We’ve asked Novomatic to come up with proposals that could keep gaming facilities competitive for customers in those areas and which would avoid the need for a full investigation.”