FTC moves to block FanDuel-DraftKings merger
Competition watchdog says merger will deprive customers of benefits of competition such as price and product improvements
The Federal Trade Commission has announced it will take legal action to stop the proposed merger between FanDuel and DraftKings.
The regulator said Monday the deal would violate competition laws since the combined firms would control more than 90% of the U.S. market for paid daily fantasy sports contests.
The FTC, jointly with Attorneys General in the State of California and the District of Columbia, will file a complaint in federal district court seeking a preliminary injunction to stop the deal pending an administrative trial.
According to the FTC’s complaint, DraftKings and FanDuel are each other’s most significant competitor and compete on price and product, including size of tournaments and variety of contests.
“This merger would deprive customers of the substantial benefits of direct competition between DraftKings and FanDuel,” said Tad Lipsky, Acting Director of the FTC’s Bureau of Competition. “The FTC is committed to the preservation of competitive markets, which offer consumers the best opportunity to obtain innovative products and services at the most favorable prices and terms consistent with the provision of competitive returns to efficient producers.”
The FTC also dismissed the two companies’ main argument that they were part of the wider fantasy sports industry, saying that DFS players were unlikely to view season-long contests as a meaningful substitute, due to the length of the contests, the limitations on number of entrants and several other issues.
The complaint also alleges that entry or expansion by other providers is not likely to provide timely or sufficient competition to offset the anticompetitive effects of the merger.
The administrative trial is scheduled to begin on November 21, 2017.
DraftKings CEO Jason Robins and FanDuel CEO Nigel Eccles said in a joint statement: “We are disappointed by this decision and continue to believe that a merger is in the best interests of our players, our companies, our employees and the fantasy sports industry. We are considering all our options at this time. As we work together to determine our next steps, we would like to thank DraftKings and FanDuel players, partners and employees for their patience, support, and continued loyalty.”