Nick Rust, Chief Executive of the British Horseracing Authority (BHA), has written to the Competition and Markets Authority (CMA) to outline the governing body’s fears for the horseracing industry with regards to the proposed Ladbrokes Coral merger.
The CMA began investigating the planned merger in December and announced in May that the operators may collectively have to sell 350-400 shops to complete the merger, with 659 local areas being identified as areas where the merger may create a substantial loss of competition.
In a letter addressed to Martin Cave, Inquiry Chair for the merger, Rust wrote: “We are concerned that the current investigation has not appropriately considered the impact of the proposed merger on our industry, which delivers the anchor over the counter product in the UK retail betting market. Indeed, we have received no further contact from the Inquiry Group since our submission to the Phase 2 investigation on 1 February. Further, it is regrettable that such a short period of time has been provided to third parties to respond to the Provisional Findings given this is an issue of such complexity, and in the case of our industry, significant importance.
“If, as has been reported, the merged entity is required to divest 400 LBOs (as has been reported as a potential divestment) this would still leave it with over 40% of UK LBOs. Assuming that William Hill were not to acquire shops, this would mean that the two largest operators in the UK retail betting market would have 65-70% of UK LBOs”.
Referring to a previous merger attempt from the two operators in 1998 that was blocked by the Monopolies and Mergers Commission (MMC), Rust wrote: “The 1998 report stated that the combined Ladbrokes-Coral business would have 30.5% of LBOs – while the merged entity today would have, even after the proposed divestment, an LBO share of 40-45%. The two largest operators post-merger would have a c.70% market share, compared to the 60% deemed ‘undesirable’ for its impact on horseracing and pricing competitiveness for customers by the MMC in 1998.”
Rust is a former employee of both Ladbrokes and Gala Coral in various roles, including Commercial Director of Ladbrokes between 1987 and 2002, Managing Director, Retail Betting of Gala Coral from 2007 to 2009 and Managing Director, Retail back at Ladbrokes before leaving to join the BHA, where he started work in January 2015.
This follows William Hill’s published opinion in June, criticising various elements of the CMA’s investigating of LBO competition.
That was three days after Paddy Power Betfair’s response to the notice of possible remedies was published, where the operator made clear its concerns that “any divestiture remedy faces a considerably high risk of failure”.
Ladbrokes said in a statement sent to Gambling Insider: “Responses from various parties are very much part of the CMA process at this stage. We are continuing to work closely with the CMA and our policy has been not to publicly comment on the details of any submissions made by other parties.”
Gala Coral declined to comment.
Source: Gambling Insider