Publishing an official statement regarding the merger of Ladbrokes-Coral, the UK Competition & Markets Authority (UK CMA) has declared that it will not investigate the position of industry technology provider Playtech Plc and any influence it may have on the deal.
The UK CMA who are undertaking a Phase 2 review of Ladbrokes-Coral, were addressing concerns raised by a third party, as a result of Playtech’s shareholding in Ladbrokes Plc and its further plans to raise equity should the merger follow through.
The concerned party stated that Playtech may favour the deal, in order to strengthen its UK position in the supply of betting and gaming software and services at the expense of other betting and gaming operators.
Furthermore concerns have been pointed to Playtech being awarded a £75 million bonus on the anticipated completion of the merger, under a marketing and operations services agreement with Ladbrokes Plc reached in March 2013.
The UK CMA stated that it believed that Playtech’s position would have no overall harm on the UK betting sector, stating;
“Irrespective of whether Playtech may have the ability to completely or partially foreclose other betting and gaming operators, Playtech currently has no incentive to do so and its increased shareholding in Ladbrokes does not appear likely to change its incentives.”
“More specifically, based on the increased dividend revenue Playtech would achieve from an increased shareholding in Ladbrokes and the revenue it achieves from UK- based licensees other than the Parties, it would appear unlikely that an increased shareholding (and increased dividends flowing from that shareholding) would provide Playtech with a sufficient incentive to engage in a foreclosure strategy in favour of the Merged Entity and to the detriment of its other UK customers.”