Completed acquisition by Hilton Group plc through Ladbroke Racing (Reading) Limited of Jack Brown (Bookmaker) Limited

Affected market: Betting

No. ME/1883-05

The OFT's decision on reference under section 22 given on 13 February 2006. Full text of decision published 24 February 2006.

PARTIES

Hilton Group plc through Ladbroke Racing (Reading) Limited (Ladbroke) provides bookmaking services through 1,973 licensed betting offices (LBOs) in the United Kingdom. It also operates an internet and telephone betting business. 

Jack Brown (Bookmaker) Limited (Jack Brown) operates 141 LBOs predominantly in South Wales. The total turnover of the Jack Brown LBO business for the year ended 25 March 2004 was £170.2 million.

TRANSACTION

The transaction completed on 15 July 2005. 

JURISDICTION

As a result of this transaction enterprises under the control of Ladbroke and Jack Brown have ceased to be distinct. The UK turnover of the Jack Brown LBO business exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.

BACKGROUND

By way of a decision of 27 September 2005 (the Decision) the OFT announced that, on the evidence available to it, the OFT believed that it may be the case that the merger may be expected to result in a substantial lessening of competition in the supply of betting services through licensed betting offices in four localities of the UK. A copy of the Decision is attached at Annexe 1. For the reasons set out in the Decision, the OFT believed that there was a realistic prospect that the reduction in the number of bookmakers from two to one will lead to a reduction in choice for consumers and a potential reduction in price and non-price competition.

On this basis, the OFT decided that the merger would be referred to the Competition Commission unless Hilton Group plc/Ladbroke gave suitable undertakings pursuant to section 73 of the Enterprise Act to address the competition concerns arising from the merger.

The Hilton Group/Ladbroke's offered undertakings to divest one of either the Ladbroke or Jack Brown LBO in each of the four overlap areas to a purchaser or purchasers to be approved by the OFT.

On 14 December 2005, the OFT published the proposed undertakings inviting interested parties to give their views on them to the OFT. The OFT did not receive any responses that suggested that the proposed undertakings were not appropriate to remedy, mitigate or prevent the competition concerns identified.

DECISION

The merger would have been referred to the Competition Commission if Hilton Group plc/Ladbroke had failed to give suitable undertakings pursuant to section 73 of the Act to address the competition concerns outlined above.  The OFT has decided to accept the proposed undertakings in lieu of reference as they address those competition concerns.

This merger will therefore not be referred to the Competition Commission and the undertakings, which have been signed by Hilton Group plc/ Ladbroke, the text of which is attached as Annexe 2 to this decision, will come into effect from this date.

Annexe 2: final undertakings - Hilton Group / Jack Brown (pdf 98 kb)

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