The United Kingdom Competition Commission could kill a merger between the Rank Bingo Group and Gala Casinos Limited, two of the UK’s largest casino operators. Genting is the third major operator. The acquisition would reduce casino competition to just two, Rank and Genting. The Competition Commission was informed by the Office of Fair Trading, which worries competitiveness could be severely limited by the merger. The OFT states competition at the national level and in nine local areas would be affected.
Stringent Bingo Licensing Requirements
The tough licensing process makes it difficult for casino entry and expansion, the OFT added. Third parties that may want to make up for the loss caused by the merger, would be limited in entry and expansion. Thus, the OFT felt more comfortable passing the decision to the Competition Commission, which will conduct a review by Feb. 3, 2013. Rank was forthcoming on undertakings, and while the OFT appreciated its willingness, the undertakings didn’t give a clear enough picture to address the OFT’s concerns. Loss in competition caused by the merger could be devastating and irreversible, the senior director and decision maker of the OFT said.
Rank Bingo is reviewing its options in light of the decision. Last week, the casino giant reported a nine percent increase in annual profits. The Mecca Bingo brand and Grosvenor Casino were the major players in the rise. The OFT stated the decision to pass the merger in question to the Competition Commission for review will be available online in the merger section.
Points of the OFT
1. Rank has 34 casinos. A merger would set Rank up with 23 more gaming outlets.
2. The OFT believes the sale of goods and services in the UK would be compromised with the merger.
3. The Enterprise Act of 2002 states both parties in a merger must no longer stand alone as distinct businesses. The specific enterprise sought must exceed 70 million in UK currency, or a 25 percent share of supply must be created at the onset of the merger.
4. The Competition Commission has 24 weeks to make a decision, but may extend it another eight weeks for special reasons.
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