CMA call for in-depth probe into Ladbrokes-Coral merger

The UK’s Competition & Markets Authority (CMA) has decided to refer the proposed merger between Ladbrokes and Coral for an in-depth phase 2 investigation.

In July last year, Ladbrokes agreed to merge with Gala Coral Group Limited (Coral), creating a company called Ladbrokes Coral, with a market cap of around £2.3bn.

Ladbrokes and Coral are the second and third largest bookmakers in the UK by number of shops, known as licensed betting offices (LBOs). The two businesses also provide betting and gaming products online, ‘on-course’ at certain racecourses, and by telephone.

In December, the CMA commenced its phase 1 investigation and issued an invitation to comment, seeking views on the request for a fast track reference to an in-depth phase 2 investigation, which had been made by the companies.

In phase 1 of its investigation, the CMA has discovered that the merger would result in a substantial lessening of competition in relation to the supply of fixed odds betting products in LBOs in a large number of local areas where Ladbrokes and Coral overlap.

Therefore, the CMA has said that the loss of competition between Ladbrokes’ and Coral’s LBOs in local areas where choice will be reduced to only one or two LBOs may lead to a worsening of the businesses’ offer to customers.

With a combined 4,500 stores, Ladbrokes and Gala Coral eclipse the nearest competitor William Hill, which only has 2,400 stores.

The CMA will announce its final decision by 24 June.

Andrea Coscelli, CMA Executive Director of Markets and Mergers and decision-maker in this case, said: “As the second and third largest bookmakers in the country in terms of betting shops, the merger could affect competition in the very large number of areas where their shops overlap.

“As such it warrants an in-depth investigation so we can look in detail at these and other potential competition concerns. The fast-track request means that the inquiry group can now get started with that investigation.”