The Competitions and Markets Authority in Great Britain (CMA), after finding competition concerns, warned that it may launch an investigation of the Spreadex-Sporting Index merger.
Spreadex purchased the B2C division of Sporting Index last year from Sporting Group Holding. Customers in the UK can bet on fixed odds and spreads online with both companies. Spreadex is also involved in financial spread betting, casino betting and other betting markets.
Nevertheless, there were concerns raised about the merger soon after it was completed in regards to how this could affect market competition. CMA launched an investigation in response.
The CMA stated that after reviewing the feedback received during the Phase 1 of the investigation it is possible the merger will result in a significant lessening of the competition on a UK or UK markets.
A monopoly has been created by the merger?
The CMA confirmed the decision in a press release. It said that the Phase I investigation was focused on the fact that Spreadex and Sporting Index were the only UK licensed spread betting providers. The merger could have resulted in a monopoly as the other licensed betting provider was removed.
Spreadex, as well as Sporting Index, both claimed that they would face restrictions from fixed-odds bet providers following the merger. The CMA has said that it does not have enough evidence to back this up.
The CMA stated that the CMA believed the merger would substantially reduce competition for licensed online spread betting in the UK. Spreadex may lose its incentive to provide competitive odds if it does not have a rival.
Spreadex: What’s next?
Although the ruling is a setback for the business that has expanded, the case still remains open.
From 4 April, Spreadex and Sporting Index have a total of five days to provide “meaningful answers”. If they do not meet these demands, then the case will go to Phase 2.
Naomi Burgoyne said that a Phase 2 investigation is deeper and may flag additional concerns.
Burgoyne explained that “we believe this deal will remove the competition in sports spread betting and allow Spreadex to have a monopoly on this market.” It is crucial that the odds remain competitive for customers.
Spreadex: Regulatory issues in the past
Spreadex isn’t the only company to have faced issues with the UK regulatory authorities. The Gambling Commission in August 2022 ordered Spreadex pay PS1.4m ($1.8m/EUR1.6m) for violating social responsibility regulations and anti-money launder (AML).
Spreadex violated the Licence Conditions and Codes of Practice between January 2020 and may 2021. Spreadex also did not comply with the Social Responsibility Code.
Spreadex’s failures to demonstrate social responsibility included the ineffectiveness of its financial alerts. Spreadex was found to be allowing customers to suffer significant losses in a very short time.
