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UK watchdog to probe £10bn Flutter-Stars gambling deal

5th February, 09:04

Competition authorities plans to investigate the £10bn merger between the two gambling groups Flutter, owner of Paddy Power, and Stars Group, which owns Sky Betting and Gaming.

The UK's Competition and Markets Authority said it would investigate whether the deal would result in a "substantial lessening of competition" in the UK gambling market.

The probe follows the CMA's controversial last-minute intervention into a merger between the food delivery platforms Just Eat and Takeaway.com, which forced the companies to reconsider the timetable for the deal.

An investigation into the deal between Flutter and Stars, which was announced in October, had been expected by some, given recent moves by the CMA to focus more on competition online.

Brands controlled by Flutter and Stars make up around 40 per cent of the UK's online sports betting market. Analysts at Redburn estimated that the two companies control around 26 per cent of the overall online gambling market in the UK -- close to the 25 per cent threshold over which the CMA takes an interest.

The deal is expected to close in the second or third quarter of this year depending on the CMA's findings and, if successful, will create the largest online betting operator in the world by revenue.

In 2016, the CMA ordered Ladbrokes and Gala Coral to sell up to 400 shops in order to gain clearance for their £2.2bn merger. The pair would have owned 4,000 retail betting shops in the UK.

Since then the fast growth of the online betting market has resulted in further consolidation across the industry with GVC buying the merged Ladbrokes Coral and Paddy Power merging with Betfair, the betting exchange.

There is potential that the Flutter and Stars Group tie-up could be reviewed by Australian authorities where both brands have a strong presence.

Julian Easthope, an analyst at Royal Bank of Canada, said that, despite the competition review, he did not expect "significant remedies" to have to be made.

Source