Ladbroke referral to the MMC looks like a sure bet

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The Independent Online
Margaret Beckett, President of the Board of Trade, is poised to refer Ladbroke's pounds 362.7m acquisition of the Coral betting chain to the Monopolies and Mergers Commission over fears it will give the group a monopoly in the betting industry.

A referral could be announced this week after an preliminary investigation of the deal by the Office of Fair Trading. The Government could force Ladbroke to divest of hundreds of betting shops to overcome competition concerns or could require it to sell the whole of the 833-strong Coral estate. Ladbroke, led by Peter George, controls 2,600 betting shops, or 35 per cent of the total UK market after signing an unconditional deal to buy 833 Coral shops from Bass on New Year's Eve. It had hoped to avoid an MMC inquiry by selling 133 of its betting shops to the Tote. Ladbroke claims disposal of these sites means it conforms to the "quarter-mile rule" laid down by the MMC when Mecca merged with William Hill in 1989.

This stipulated that a bookmaker could not have more than one shop within a 440 yard radius of another branch and was aimed at ensuring no one was able to establish a local monopoly. Until a few weeks ago, Ladbroke was confident this would be enough to avert an MMC inquiry. But sources suggest the group is resigned to the fact that its betting business will face months of uncertainty as a full-scale investigation gets under way. The acquisition has raised concerns among senior cabinet ministers. Robin Cook, the Foreign Secretary and a horse-racing fan, has publicly voiced worries about the deal and Alan Meale, another Labour MP, has led the attack against the acquisition. One source said: "A referral now seems inevitable. Political pressure is growing for an MMC referral which is likely to lead to more divestments."

The Coral purchase has also caused an outcry from rivals in the industry, including William Hill, now owned by Nomura, the Japanese bank. Analysts believe there would be no shortage of buyers for any shops that Ladbroke is forced to sell. The Tote is known to be keen to expand its estate, as is Stanley Leisure, currently the third biggest player in the market, and William Hill.

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