Ladbrokes Coral merger to be completed in autumn after CMA ruling

The merger between Ladbrokes and Coral is set to complete this autumn after the Competition and Markets Authority (CMA) confirmed that the two firms must divest between 350 to 400 shops.

In its final judgement, the CMA said: “Having considered responses to its provisional findings published in May and further analysed the evidence, the group of independent panel members investigating the merger has, in a summary of the Competition and Markets Authority’s (CMA) final report, identified 642 local areas where it may be expected to result in a substantial lessening of competition.

The summary states that the merger could lead to a worsening of the offer made to customers at both a local and national level.

It said: “To address these concerns and preserve competition for the benefit of customers in these local areas, Ladbokes and Coral must sell around 350 to 400 betting shops to one or more suitably qualified up-front buyers, which must be approved by the CMA. As many of the problematic local areas overlap, the sale of a betting shop in one local area may also remedy the competition concerns in the overlapping area.”

The sales must be substantially completed before the merger can go ahead.

Inquiry Chair Martin Cave added: “We’ve found that the merger between two of the largest bookmakers in the country would reduce competition and choice for customers in a large number of local areas.

“For these customers, competition comes from the choice of shops in their local area and they would lose out from any reduction of competition and choice. Discounts and offers of free bets to individual customers are two of the ways betting shops respond to local competition which could be threatened by the merger. Such a widespread reduction in competition at the local level could also worsen those elements that are set centrally, such as odds and betting limits.

“Although online betting has grown substantially in recent years, the evidence we’ve seen confirms that a significant proportion of customers still choose to bet in shops – and many will continue to do so after the merger. We therefore believe that a sale of shops of this scale is needed to protect these customers.”

It was always likely that the CMA would insist on betting shop sales, but given that some estimates suggested the number would be as high as 1,000, the bookmakers will be more than happy with the judgement. The sale of these shops, already identified months ago, will now be accelerated in order to allow the merger. Betfred and Boylesports have been touted as potential buyers.

Ladbrokes commented: “Ladbrokes welcomes the announcement by the CMA that the merger with the Coral Group can proceed subject to the sale of 350-400 shops. This is a significant step forward and we will now begin to talk in earnest to potential buyers for these shops. We remain on track to complete the merger in the autumn.”