Competition Commission approves reduced casino acquisition
19 Feb 2013
The Rank Group plc (Rank) can go ahead with its acquisition of Gala Casinos Limited (Gala) provided some changes are made to the original deal, the Competition Commission (CC) has ruled.
In its final report on the merger published today, the CC has found that the merger would damage competition in five areas of the UK. The report largely confirms the CC’s provisional findings published in December, except that further analysis has cleared Liverpool/New Brighton from being one of the problem areas.
In May 2012, Rank announced a deal to acquire from the Gala Coral Group Limited 23 casinos and three ‘cold’ licences (where the operator holds the right to operate a casino in a particular area even though not currently active). The Office of Fair Trading (OFT) referred the case to the CC in August, and although their agreement subsequently lapsed, the parties have confirmed that they are still pursuing the merger.
The transaction will now be permitted as long as the casinos in Aberdeen, Stockton-on-Tees, Bristol and Cardiff are not included. In addition, Rank must sell the cold licence it holds in Edinburgh to an upfront buyer approved by the CC or it will also be prohibited from buying the Gala casino in Edinburgh.
The CC found that casinos compete for customers mainly at a local level, particularly on elements such as customer service and promotions. Rank and Gala are two of the three large national casino operators in the UK. Following the merger, there would be only two large national casino operators, Rank and Genting.
Chairman of the Rank/Gala Inquiry Group and CC Deputy Chairman, Professor Martin Cave, said: ‘We think that removing the casinos in problem areas from the deal and requiring Rank to sell the Edinburgh cold licence to an upfront buyer will protect the interests of customers. The excluded casinos are all profitable and so we believe that they will continue to act as viable competitors to Rank in these areas.’
Notes for editors
1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.
2. The members of the Rank/Gala Inquiry Group are: Professor Martin Cave (CC Deputy Chairman and Chairman of the Group), Professor John Cubbin, Peter Jones and Richard Taylor.
3. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.
4. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
5. Further information on this inquiry, including the terms of reference and other key documents, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at: www.competition-commission.org.uk.
6. Enquiries should be directed to Rory Taylor or Siobhan Allen or by ringing 020 7271 0242.
