by Renee Israel
Betfred, once Britain's fourth largest bookmaker, is planning to close down
25 of its betting shops in order to resolve competition concerns in the UK
betting industry.
When Betfred beat competitors in the race to acquire the state owned Tote, it
was a carefully crafted deal that ensured fair play on several levels.
Betfred had promised that it would honor all of Tote's then commitments and also
that it would keep job losses at Tote to a contractually agreed minimum. At the
time, market evaluation was not the only consideration in Tote's selecting
Betfred, but the well-being of the racing industry at large.
Under the deal, Warrington-based Betfred acquired the license to operate
state owned Tote's exclusive pool betting services for a period of seven years,
adding 517 Tote branches to Betfred's existing 840 outlets.
Betfred Bows to the Office of Fair Trade Requirements
At the time of the deal in June this year, the UK's economic regulator, the
Office of Fair Trade (OFT) conducted an investigation into the deal to ensure
that it did not violate any fair trade regulations.
The investigation found that Betfred's acquisition of Tote would not lead to
unfair competition across the nation with regard to land based, telephone or
online betting. However, it found that Betfred would face significant challenges
from other betting firms like William Hill, Coral and Ladbrokes, for having too
many betting shops.
The OFT concluded that the deal would result in a significant lack of choice for
punters in certain towns and cities across the UK. It found that in these
locations there was very limited or no competition from other operators. It
surmised that the newly merged company would further stifle the possibility of
other operators entering these areas.
As a result, the OFT suspended its referral of the merger deal to the
Competition Commission and had also said that it required an identified up-front
buyer before it could accept such deals.
The specific concerns of the OFT were shared with Betfred, and in keeping
with the company's reputation for fair dealing, it has come up with a proposal
that could be acceptable for all parties concerned. This is to close one of its
shops in each of the locations identified by the OFT, which comes to 25 shops in
all.
If Betfred's application to close 25 betting shops is accepted by the OFT and
the government regulator, it would add yet another layer of fair play to the
£265m deal - one which will probably see the entry of healthy competition to
Betfred in the few pockets where it does not currently exist.
