Lottery company refused extra services

National Lottery group Camelot's hopes of offering extra services were dashed today after regulators refused the move due to "serious" competition concerns.

Camelot had been fighting to overturn a provisional decision by the National Lottery Commission (NLC) last July to block proposals to provide mobile phone top-ups and electronic bill payments.

But the NLC said that, following legal advice, it believed Camelot's plans would breach European competition law.

Camelot described the decision as "bewildering" and said it was already commonplace across Europe for lottery operators to offer these services.

Camelot claimed it had received conflicting legal advice and would now consider its options.

But it signalled plans to challenge the NLC decision, saying it was "confident that it will enter the commercial services business in due course".

It estimates the proposals would have generated £100,000 a week extra for good causes - having pledged 82.5% of profits made by the service.

Paul Charmatz, managing director of commercial services for Camelot, said: "This is a bewildering decision and without precedent in European Union history when you consider that all over Europe other lottery operators offer these services to support their retailers."

Camelot had sought to appease NLC concerns with a raft of measures, such as publishing separate accounts for the new business and employing a competition law officer to police the service.

But the NLC said its legal advice suggested Camelot would effectively be given an unfair advantage through its lottery monopoly in the UK.

Mark Harris, chief executive of the NLC, said: "The Commission is here to protect the long-term propriety of the National Lottery and the £1.6 billion it raises annually for good causes.

"We cannot, as a public body, consent to the proposal that is before us when doing so may place us in breach of European competition law. We have considered whether the risks involved can reasonably be mitigated but have concluded, based on the advice we have received, that they cannot."

Camelot's plans to offer services through its Lottery terminals were backed by retail groups, such as the National Federation of Subpostmasters and the National Federation of Retail Newsagents, which supported the prospect of a new entrant to a market they feel needs more competition to improve terms and services currently offered.

George Thomson, general secretary of the National Federation of Subpostmasters (NFSP), said: "This is a sad day for the bill payment sector and for subpostmasters. We have said previously that bill payment and mobile top-ups remain a hugely important source of revenue for post offices.

"The NFSP has been working closely with Camelot and Post Office, and had this been approved, the result would have been highly beneficial to our treasured national network of post offices.

"The NLC's ruling has further entrenched the unfair and uncompetitive practices that prevail in the bill payment sector."

Parminder Singh, national president of the National Federation of Retail Newsagents added: "We remain of the view that customers are best-served by having available as wide a range of choice as possible as to where and how they pay their bills and will continue to work to achieve this end."

But rival local payment group PayPoint, which has strongly opposed Camelot's plans, welcomed today's news.

Dominic Taylor, chief executive of PayPoint, said: "It would be entirely wrong for Camelot to be allowed to exploit its position as Lottery monopolist and spread its resources to offer unrelated commercial services.

"We are pleased that the National Lottery Commission has accepted the compelling arguments that the proposal was undesirable and contrary to the public interest."

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