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72/12 20 August 2012
The Office of Fair Trading (OFT) today referred the Rank Group PLC's (Rank's) anticipated acquisition of Gala Casinos Limited (Gala) to the Competition Commission for further investigation, due to the OFT's concerns the merger will substantially reduce competition in the casino sector.
The OFT's investigation found that Rank and Gala are two of the three large national casino operators in the UK. Following the merger, there would be only two large national casino operators, Rank and Genting.
The OFT is concerned that the merger would reduce competition both at a national level and in nine local areas. A reduction in competition in the casino sector could result in a worse deal for consumers.
Additionally, the OFT found that there are high barriers to entry and expansion in the casino sector due, among other things, to the licensing regime, which would severely limit the ability of third parties to enter or expand to replace the loss of competition caused by the merger.
Given the realistic prospect of this merger resulting in a substantial lessening of competition, the OFT considers it appropriate to refer the merger to the Competition Commission for an in-depth review.
Rank offered to provide undertakings in lieu of reference to the Competition Commission, including the divestment of casinos in a number of local areas. The OFT welcomes the parties' willingness to resolve the concerns in local areas, however, the undertakings were not considered sufficiently clear-cut to address all of the concerns raised by this merger.
Ali Nikpay, OFT Senior Director and Decision Maker in this case said:
'Rank and Gala are two of only three large national casino operators in the UK. This merger would represent a major consolidation which could be expected to reduce competition, both locally and nationally. The high barriers to entry and expansion in the casino sector mean the loss of competition could potentially be irreversible.
'As such, we believe it is appropriate that the Competition Commission reviews this merger in detail to ensure that the interests of consumers are protected.'
The Competition Commission is expected to report by 3 February 2013.
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