Ladbroke bid for rival goes to the wire as OFT moots monopoly referral

Tote looks to gain shops

THE FATE of Ladbroke's audacious pounds 375.5m bid for rival bookmaker Corals may be deter- mined by a visit that representatives of the British Horseracing Board (BHB) will soon be making to the Office of Fair Trading.

Ladbroke is waiting to find out if the Office of Fair Trading is to refer the bid to the Monopolies and Mergers Commission. Publicly it is confident that the deal will escape referral. Privately, the BHB believes there is a deal to be struck - the racing industry's support for Ladbroke's bid in return for the sale of more shops to the Tote, the BHB's own betting operation, and reassurances on other sources of income.

A BHB insider said last week: "We will be visiting the OFT during the next couple of weeks and also expect to be talking to other relevant parties. The statement we have issued gives an indication of our approach."

The BHB's brief, widely overlooked statement welcomed the conditional sale of 134 betting shops to the Tote - an offer made by Ladbroke to clear the way for its Coral bid. But it wants more. "Unless substantial undertakings are forthcoming from Ladbroke which benefit both racing and the Tote," it said, "the BHB may be forced to recommend a referral to the MMC."

The stakes are huge. During the year ended 31 March 1997, a total of pounds 6.7bn was staked with off-course bookmakers - approaching 70 per cent of it on horseracing.

Ladbroke already own 22 per cent of Britain's 8,600 betting shops, with Corals owning another 10 per cent. Even after

divesting itself of 134 shops, the takeover leaves Ladbroke with roughly 30 per cent of all shops and over 36 per cent of total turnover. In 1989, when Mecca merged with Hills, the Big Four became the Big Three. Now, punters face the Big Two, with Ladbroke and Hills responsible for 48 per cent of shops and over 60 per cent of turnover.

These are figures that have "referral" stamped firmly across them, and a group of MPs led by Labour's Alan Meale are campaigning to block the takeover. Mr Meale said: "I have yet to meet an MP who believes the deal should be allowed to go through. I have put down an early day motion opposing it and will be seeing the relevant ministers to voice our opposition. It cannot be in the interest of consumers."

Ladbroke's apparent confidence stems from advice obtained from the OFT in advance of their unconditional bid. The advice was to apply the same criteria that were applied by the MMC when it reported on the merger of Hills and Mecca.

On that occasion, the MMC concluded that the relevant arena for assessing competition was the local market. It accepted GrandMet's contention that "competition between betting offices should be considered on the basis of a 440-yard radius from any betting office".

The result was highly satisfactory to GrandMet and would be equally welcome to Ladbroke. They have identified 134 shops caught in the net and sold them to the Tote for over pounds 41m. Ladbroke's betting shop estate is set to expand from 1,904 to 2,609 shops, while the Tote's will move up to 346 from 212.

But the game is not over. The concerns of 1989 apply more forcibly in 1998. The merger between Hills and Mecca was a much smaller affair; the union of one company owning 9 per cent of betting shops with another owning 8 per cent. That was considered enough to warrant a referral to the MMC.

It could be argued that Ladbroke's market sham has now reached a level sufficient in itself to warrant a referral on public interest grounds.

There are more specific anxieties - the fear that Ladbroke may be able to exert greater influence over the odds offered to punters, and that the already very limited price competition will be reduced still further.

Since 1989, the number of betting shops has fallen from an estimated 9,800 to approximately 8,500. That alone makes it necessary to reconsider the 440-yard criterion. Larger, more flexible areas may be appropriate, resulting in Ladbroke being obliged to shed many more shops.

The key to the eventual outcome may lie in the unique position of the Tote. The Tote, ultimately controlled by the government for the benefit of racing, has three relevant qualities: Tote bets represent potential price competition to the bookmakers' fixed odds and computer forecast bets; the Tote's profits are invested in racing; the Tote lacks, and wants, a national network of betting shops.

q David Ashforth is senior reporter of Sporting Life.

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific