CMA probe finds Spreadex’s acquisition of Sporting Index “could substantially lessen” competition
Regulator’s ongoing phase two investigation, led by an independent panel, has raised provisional concerns that merger will lead to a worse experience for players
The ongoing investigation into Spreadex’s acquisition of Sporting Index has provisionally found the merger raises competition concerns.
Initial fears had been raised by the UK Competition and Markets Authority (CMA) months after Spreadex bought the firm from French operator Française des Jeux (FDJ) in November 2023 for an undisclosed a fee.
This triggered a phase one investigation in February 2024 which decided further action was required, after it was noted the Spreadex and Sporting Index deal would create a monopoly due to the two companies being the only licensed spread betting operators in the UK.
It was also discovered that FDJ received two bids from two other “credible potential purchasers”.
A deeper phase two investigation then commenced in April by the CMA after Spreadex declined to provide information to the regulator.
Led by an independent panel, provisional findings have suggested that the merger has “substantially lessened, or could substantially lessen, competition in the supply of licensed online sports spread betting services in the UK”.
The panel has also suggested that the merger could lead to a “worse user experience”, typified by a “a more limited range of products and/or higher prices than would otherwise have been the case absent the merger”.
The provisional findings also suggested that other firms in the UK that currently offer fixed-odds betting and financial spread betting only provide a “weak constraint on the new business”.
The panel is also exploring potential remedies to the lessening of the competition, including whether Spreadex should sell all or part of Sporting Index’s assets, as well as any of Spreadex’s existing assets in a deal.
Richard Feasey, chair of the independent panel, commented that the deal has lessened the supply of online sports spread betting services in the UK and that a solution to fix the situation is now being considered.
Feasey said: “It would remove the only other licensed provider of sports spread betting in the UK and could lead to a worse user experience for consumers.
“We will now be considering how best to remedy this lessening of competition. Given that Spreadex has already acquired certain Sporting Index assets, our initial view is that Spreadex would need to divest sufficient assets to allow a purchaser to operate a rival licensed spread betting business on a standalone basis.”
A final report will be issued by 26 November 2024, with the CMA saying it welcomes responses to its provisional findings by 15 August 2024.
August and September will then be spent considering the possible remedies and response hearings, before a final deadline for all parties’ responses and submissions scheduled for late October or early November.