Deal Between Flutter, the Stars Group Under Scrutiny
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Photo: Courtesy of Betfair
Betfair and Paddy Power are owned by Flutter
The £10 billion merger between Flutter, the owners of Paddy Power and Betfair, and the Stars Group, which owns Sky Betting and Gaming, is to be investigated by the U.K.'s Competition and Markets Authority.
The CMA announced Feb. 5 it would look into whether the deal would cause a "substantial lessening of competition" in the U.K. gambling market and has invited any interested party to comment on the transaction by Feb. 18. The brands controlled by Flutter and the Stars Group make up about 40% of the U.K.'s online sports betting market.
The probe follows a similar merger investigation on Just Eat and Takeaway.com.
The deal between Flutter and the Stars Group was announced in October and is expected to close in the second or third quarter of this year. If it is successful, the merger will create the largest online betting operator in the world by revenue.
Phase one of the investigation is currently underway, in which the CMA announced it would "consider whether it may be the case that the merger, if carried into effect, will result in the creation of a situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation could result in a substantial lessening of competition within any market in the U.K. for goods and services."
Following the closure of the invitation to comment, a deadline on the phase one decision has been set for March 31. In 2016, Ladbrokes and Coral were ordered by the CMA to sell 360 shops in order to gain clearance for their £2.2 billion merger.
As of 10:10 a.m. Feb. 5, the announcement had little impact on Flutter Entertainment's share price, which was 8,680.
The deal could also be reviewed by Australian authorities as both Flutter and the Stars Group have a strong presence in the country.
What is the CMA?
The Competition and Markets Authority is an independent, non-ministerial department that works to ensure consumers get a good deal when buying goods and services and that businesses operate within the law.
In order to do this, the authority investigates mergers between organizations to ensure they do not reduce competition. It also investigates markets if there is reason to believe there are competition or consumer problems.
The CMA takes action against businesses and individuals who take part in anti-competitive behaviors, as well as protecting consumers from unfair trading practices.