Completed acquisition by Gala Leisure Limited of County Properties and Development Ltd

Affected market: Bingo

No. ME/2288/06

The OFT's decision on reference under section 22 given on 31 July 2006. Full text of decision published on 7 August 2006.

PARTIES

Gala Leisure Limited (Gala) is part of the Gala Group, which is controlled by three private equity firms, namely Candover, Cinven and Permira. Gala is an operator of licensed bingo clubs in the UK; its activities in the wider leisure sector include the operation of casinos, licensed betting offices (LBOs) and Internet gaming.

County Properties and Development Ltd (County) was, prior to the acquisition, a family-owned business operating licensed bingo clubs in Scotland. Its turnover in the last financial year was around £15 million.

TRANSACTION

On 9 January 2006, Gala acquired 100 per cent of the share capital of County.

JURISDICTION

As a result of this transaction Gala and County have ceased to be distinct. The parties overlap in the operation of licensed bingo clubs in Great Britain. Their combined share of supply (by admissions) is around 40 per cent, therefore the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.
 
BACKGROUND

By way of a decision announced on 25 May 2006 (the Decision), the OFT concluded that on the evidence available to it, the merging parties were before the merger each other's closest competitors in and around Glenrothes, Fife (Scotland) and it was not expected that post merger the remaining competitors who were situated in the Kirkcaldy and Dunfermline areas and/or new entry (or the threat of new entry) would be able to deter or defeat any attempts by the merged entity to capitalise on the loss of rivalry (for example by raising prices) brought about by the merger. Consequently the OFT concluded that on the basis of all of the evidence there was a realistic prospect that the merger would result in a substantial lessening of competition in the operation of licensed bingo clubs in the Glenrothes area.

The Decision states that the OFT believes that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom for goods or services. On this basis, the OFT decided that the merger would be referred to the Competition Commission unless Gala gave suitable undertakings pursuant to section 73 of the Act to remedy the competition concern arising as a result of the merger. A copy of the Decision is attached at Annexe 1 of this decision.

Gala offered undertakings to divest one of its licensed bingo clubs in the Glenrothes area (the proposed undertakings).

On 20 June 2006, the OFT published the proposed undertakings inviting the views of interested parties as to whether the proposed undertakings would be appropriate to remedy, mitigate or prevent the competition concern identified. The OFT did not receive any responses to this invitation to comment.

DECISION

This merger would be referred to the Competition Commission if Gala failed to give suitable undertakings pursuant to section 73 of the Act to address the competition concern identified in the Decision and outlined above. The OFT has decided to accept the proposed undertakings in lieu of reference as they would address that competition concern.

This merger will therefore not be referred to the Competition Commission and the undertakings which have been signed by Gala, the text of which is attached as Annexe 2 to this decision, will come into effect from this date.

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