CMA Highlights Concerns over Spreadex-Sporting Index Merger

The merger of Sports Index and Spreadex may have a detrimental impact on sports spread betting in the United Kingdom, a Phase 2 investigation of a panel with the Competition and Markets Authority (CMA) reveals. The Authority disclosed details regarding the probe Thursday, highlighting a number of concerns related to the proposed business combination.

In November, La Française des jeux (FDJ) agreed to sell Sports Index to Spreadex for an undisclosed sum. Considering that Sports Index and Spreadex both operate within the same industry, offering sports spread betting, the deal fell under scrutiny by the CMA.

A probe into the business combination was launched earlier this year amid concerns about the creation of a monopoly. Then, back in April, the CMA confirmed that the Spreadex-Sporting Index merger will undergo further investigation.

Now, as noted, CMA’s Phase 2 investigation highlighted several concerns related to the merger. Those included lessening competition, limiting the range of products for the consumers and potentially worsening of the user experience.

Those conclusions were based on the fact that both Spreadex and Sporting Index offer online sports spread betting. However, their merger “has substantially lessened, or could substantially lessen, competition in the supply of licensed online sports spread betting services in the UK,” as explained by the CMA.

The Business Combination May Significantly Impact Competition, Impact User Experience

Richard Feasey, the chair of CMA’s independent panel overseeing the Spreadex-Sporting Index merger, commented on the matter. He revealed that after an assessment conducted by the panel, the business combination raises significant concerns related to competition within the licensed online sports spread betting vertical. Moreover, Feasey added: “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.”

“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.“

Richard Feasey, chair of the independent panel overseeing the merger at CMA

He said that the panel’s next move is to determine the best way to remedy the situation and halt the lessening of competition.

Feasey pointed out that divestment of sufficient Spreadex assets may be one way to resolve the issue. He revealed that those assets need to be great enough for the purchasing company to be able to solely operate a rival spread betting business.