Tuesday August 21,2012 : RANK-GALA CORAL DEAL UNDER SCRUTINY
Office of Fair Trading refers proposed acquisition to UK Competition Commission.
Two major UK online and land gambling groups are under scrutiny this week following the Office of Fair Trading's decision to refer the Rank plc bid for the Gala Coral group to the UK Competition Commission.
Rank has issued a statement saying that it is considering the implications of the decision and will make a further announcement in due course.
The acquisition move was announced last week and was followed by an OFT statement that it is concerned that the merger will substantially reduce competition in the British casino sector, because Rank and Gala Coral are two of the three major casin operators in the UK.
If the deal goes through there would only be two large national casino operators – Rank and Genting. That could mean reduced competition and worse deals for consumers, the OFT fears.
The OFT is also concerned that the high barriers to entry and expansion in the casino sector due, among other things, to the licensing regime, severely limit the ability of third parties to enter or expand to replace the loss of competition caused by the merger.
Rank offered to provide undertakings in lieu of reference to the Competition Commission, including the divestment of casinos in a number of local areas, reports MoneyAM.
OFT senior director, and decision maker in this case, Ali Nikpay, said: "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.
"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 expected to report by 3 February.