Spreadex-Sporting Index Merger to Undergo Further CMA Probe

A recent acquisition, encompassing the sale of the spread betting operator, Sports Index, to Spreadex captured the attention of the Competition and Markets Authority (CMA) in the United Kingdom. The deal dates back to November when La Française des jeux (FDJ), agreed to sell Sports Index to Spreadex, a competitor in the same industry. Financial details about the acquisition were not disclosed.

Earlier this year, the CMA confirmed the launch of an inquiry into the merger. Then, in April, the Authority said that the merger between Spreadex and Sports Index may have created a monopoly. At the time, the CMA said that the merger may have resulted in a substantial lessening of competition.

Now, the CMA’s probe into the merger continues. Earlier this week, the Authority confirmed that the business combination was referred for further in-depth investigation. Not unexpectedly, the “substantial lessening of competition” within the market in the UK is a primary reason for the additional scrutiny.

“The CMA has referred the completed acquisition by Spreadex Limited of the B2C business of Sporting Index Limited for an in-depth investigation, on the basis that, on the information currently available to it, it is or may be the case that this Merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom,“

reads a statement released by the CMA

Further Scrutiny amid Fears about Spread Betting Services Monopoly

The additional in-depth investigation comes as phase 2 of the Authority’s probe into the merger between Sporting Index and Spreadex. Earlier this month, the CMA said that the merger will undergo phase 2 of scrutiny “unless the parties offer acceptable undertakings to address these competition concerns.”

“We believe that this deal could remove competition for sports spread betting services and give Spreadex a monopoly in this market. It is important that customers can rely on competition in the market to keep odds competitive.“

Naomi Burgoyne, phase 1 decision maker for the case at the CMA

Confirming that the merger raises potential competition concerns, Spreadex was given five days to submit its position, Naomi Burgoyne, CMA’s phase 1 decision maker for the case, confirmed earlier this month. She said that failure to address those concerns would result in the second phase of the inquiry into the deal.

According to Burgoyne, the business combination eliminates the competition, designating Spreadex as a monopoly within the sports spread betting services market. Finally, acknowledged the importance of a competitive market to ensure competitive odds.