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
ebooks
ebooksA special investigation by Andy McSmith
Sport
Dave Mackay lifts the FA Cup in 1967 having skippered Spurs to victory
football
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
News
Jihadi John
newsMonikers like 'Jihadi John' make the grim sound glamorous
Arts and Entertainment
As depicted in Disney's Robin Hood, King John was cowardly, cruel, avaricious and incompetent
film
Life and Style
Travis Kalanick, the co-founder of Uber, is now worth $5.3bn
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn