SPO.L Regulatory News (SPO)

31 Aug 2007 07:00

Competition Commission31 August 2007 News Release 52/07 31 August 2007 FOOTBALL POOLS MERGER PROVISIONALLY CLEARED The Competition Commission (CC) has provisionally cleared the anticipatedacquisition by Sportech plc (Sportech) of the Vernons football pools business ofLadbrokes plc. Sportech already operates two football pools, Littlewoods andZetters, though the latter is very small. The acquisition of Vernons would meanthat it will have virtually 100 per cent of the UK football pools market. In a summary of its provisional findings published today at www.competition-commission.org.uk, the CC has concluded that the acquisition may not be expected to result in a substantial lessening of competition. Peter Davis, Inquiry Chairman, said: Although Littlewoods and Vernons pools provide customers with similar products,we found little evidence that customers have switched between the two in thepast. There was, for instance, no evidence of customer switching to Littlewoodswhen Vernons closed its house-to-house collector network in 1998, to Vernonswhen Littlewoods raised its entry prices in 1999, or more recently between thecompanies following direct mail marketing initiatives. Similarly, the extensivecustomer survey evidence we examined pointed to the conclusion that poolscustomers would be unlikely to switch between the two in large numbers in theevent of a future price rise. With or without the merger, the companies' ability to increase their prices orotherwise reduce the value of the product it offers, for example by reducing theproportion of the total stakes it returns as prizes, appears to be constrainedprimarily by the likelihood that customers will stop playing the poolsaltogether. That constraint will not be affected by the merger. Consequently we provisionally conclude that Littlewoods and Vernons are notexercising a substantial competitive constraint on each other and thereforeallowing the merger would not result in a substantial lessening of competition. The full provisional findings report has also been published today. Anyone wishing to comment further on the provisional findings is requested to doso by 21 September 2007 by email to edwin.james@cc.gsi.gov.uk or in writing to: Inquiry Secretary (Sportech/Vernons merger inquiry)Victoria HouseSouthampton RowLondonWC1B 4AD The CC is required to publish its final report by 17 October 2007. Notes for editors 1. The CC is an independent public body, which carries out investigationsinto mergers, markets and the regulated industries. 2. The members of the Sportech/Vernons inquiry group are: Peter Davis(Group Chairman), Roger Davis, Peter Stoddart and Jonathan Whiticar. 3. The Enterprise Act 2002 empowers the Office of Fair Trading to refer tothe CC completed or proposed mergers for investigation and report which createor enhance a 25 per cent share of supply in the UK (or a substantial partthereof) or where the UK turnover associated with the enterprise being acquiredis over £70 million. 4. The CC has a 24-week period in which it is required to publish itsreport, which may be extended by no more than eight weeks if it considers thatthere are special reasons why the report cannot be published within that period.It is required to report by 17 October 2007. 5. Enquiries should be directed to Siobhan Allen on 020 7271 0242 (emailsiobhan.allen@cc.gsi.gov.uk). This information is provided by RNS The company news service from the London Stock Exchange