Spreadex Pushes Back Against CMA over Sporting Index Merger Decision

Spreadex refuses to concede in the ongoing drama involving the UK Competition and Markets Authority (CMA). The company argues that the regulator’s proposed solution to its acquisition of Sporting Index’s consumer-focused business is based on outdated assumptions, ignoring the realities of a struggling market where many operators run on razor-thin margins.

A Struggling Market Could Jeopardize the CMA’s Solution

In formal filings released last week, Spreadex argued against the CMA’s interim conclusion that its takeover of Sporting Index risked leading to a substantial decline in competition within the UK sports spread betting market. The operator labeled the CMA’s proposed remedy, requiring Spreadex to sell Sporting Index to a rival company, as “unrealistic” and “disproportionate.” 

Spreadex drew attention to current market conditions and the lack of real alternatives at the time of the original sale. The operator noted that rising regulatory and fiscal pressures were having an industry-wide impact, with declining consumer demand leading to a reduction in market players. Broader macroeconomic instability also means that taking risks could backfire significantly.

The potential for further regulatory and fiscal changes means that the outlook for sports betting companies is deteriorating further.

Spreadex statement

The company asserted that it was unrealistic to expect another bidder to operate its B2C business viably as a competitor, especially within the short time frame mentioned in the CMA’s analysis. Spreadex added that even if an alternative bidder was found, there was no guarantee that the Sporting Index brand could sustain itself.

Spreadex Urged the Regulator to Reconsider

The CMA had initially blocked the Spreadex-Sporting Index merger, citing concerns about reduced competition. However, a court appeal sent the case back to the Competition Appeal Tribunal, which directed the CMA in February to reexamine its decision. In its latest review, the regulator reaffirmed its objection and proposed that Spreadex carve out and sell the assets it had acquired.

According to Spreadex, the authority was asking it to essentially reestablish a rival firm from the same business it had already integrated. The company argued that such a solution was highly impractical and ignored its efforts to preserve and maintain the Sporting Index brand. Spreadex also accused the regulator of overlooking the activities of unlicensed offshore operators, who pose a rising challenge to the regulated sector.

The CMA’s provisional findings fail to properly consider the important constraint of unlicensed sports spread betting providers.

Spreadex statement

Calling the CMA’s remedy “onerous” and “ill-suited” to industry realities, Spreadex warned that forcing the sale of assets at this time would do more harm than good. The company has called for the regulator to reconsider its decision, paying greater attention to proportionality and market conditions. As a final verdict swiftly approaches, the fate of the merger remains uncertain.