OFT refers football pools merger to the Competition Commission

69/07 3 May 2007

The OFT has today referred the anticipated acquisition by Sportech plc of the Vernons football pools business from Ladbrokes plc to the Competition Commission (CC).

The OFT has decided that the test for reference is met in relation to the supply of football pools in the UK. Sportech trades under the Littlewoods and Zetters football pools brands, and the acquisition would mean that Sportech would own the three football pools operators in the UK.

Simon Pritchard, Director of Mergers at the OFT, said:

'The merger creates a monopoly supplier of football pools in the UK. Many pools players switched to the National Lottery after its 1994 launch but remaining customers are mostly dedicated players spending almost £80 million a year. Other evidence before us clearly supported the large number of consumer concerns we received, and suggested that too few of these customers would switch to alternatives to discipline Littlewoods if it reduced value for money post-merger. Nor is entry likely to constrain the merged firm. The OFT therefore has concerns that UK football pools players will face higher prices or lower pay-out ratios after the merger. The Competition Commission will now investigate and take appropriate action.'

The CC is expected to report by 17 October 2007.

NOTES

1. The Reference Test - the OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

3. The CC may extend the 24 week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

4. The text of this decision will be published in the mergers section as soon as is reasonably practicable.

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