Watchdog warns Spreadex-Sporting Index merger raises competition concerns following investigation

The Competition and Markets Authority (CMA) has warned spread betting company Spreadex it will launch an in-depth investigation into its merger with rival Sporting Index unless it can address concerns about the deal.

French gambling giant Francaise des Jeux (FDJ) sold Sporting Index to Spreadex in a deal completed in November, but the CMA then launched a merger inquiry in January to consider whether it would lead to a "substantial lessening of competition".

The inquiry set out a number of conditions that the management at Spreadex should adhere to, including the prohibition of actions which might lead to the integration of the two businesses without prior written consent from the CMA.

However, elements of integration had already taken place by the time the CMA investigation was announced, including the two brands running from the same technology platform.

Spreadex and Sporting Index are the only licensed providers of online sports spread betting in the UK and the CMA announced on Thursday that the deal may have created a monopoly. 

The watchdog said that as part of the investigation Spreadex and Sporting Index had suggested they would be constrained by fixed-odds betting providers after the merger. However, the CMA said it had "not received sufficient evidence to support this".  

Both Spreadex and Sporting Index now have five working days to respond with "meaningful solutions" to the CMA, otherwise the deal will be referred to what was described as a more in-depth "Phase 2" investigation. 

The CMA's Naomi Burgoyne added: "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. 

"Spreadex now has five working days to resolve our concerns. If they are unable to do so, the merger will be referred to a more in-depth investigation." 

CMA Phase 2 investigations last 24 weeks, although they can be extended by up to eight weeks, and allow an independent panel of experts to probe the initial concerns identified at Phase 1 in more depth.

In response to the latest announcement, Spreadex said it was continuing "to assist and co-operate with the CMA’s ongoing review".

Spreadex acquired Sporting Index from Sporting Group Holding Limited, which is a subsidiary of FDJ.

Sporting Group also includes sports betting technology and trading service provider Sporting Solutions, which FDJ is reported to have also put up for sale. 

Read these next: 

Investigation launched into Spreadex acquisition of Sporting Index 

Spreadex snap up spread betting rival Sporting Index for undisclosed sum 

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