Novomatic to sell five AGCs to satisfy competition demands

Novomatic to sell five AGCs to satisfy competition demands

Monday, October 31, 2016 Posted by Andy McCarron
The acquisition of the Talarius estate has boosted Novomatic's UK numbers

Novomatic’s merger bid for UK adult gaming centre (AGC) operator Talarius is facing the prospect of a second-phase enquiry on the part of the UK’s competition watchdog unless it sells off five sites.

The Competition and Markets Authority (CMA) announced on Friday that the first-phase of its investigations in the takeover, announced in June, had concluded that there were local competition concerns affecting five specific locations.

The CMA had previously found that the acquisition did not cause any national competition concerns. However, in Chesterfield, Clapham, Dartford, Darlington and Grimsby it has been deemed that following the merger Novomatic would be “unlikely to face sufficient competition from other adult gaming centres, licensed betting offices or bingo halls.”

Novomatic UK told TotallyGaming.com: “We welcome the CMA's assessment that NOVOMATIC UK's acquisition of Talarius raises no national competition concerns. We will be working with the CMA to achieve the sale of an arcade in each of the five towns that have been identified. This acquisition represents further important growth for NOVOMATIC UK, as we continue the advancement of our operational and manufacturing companies.”

The CMA had warned that the merger would be referred for a phase two investigation unless Novomatic is able to offer undertakings which address the CMA’s competition concerns. The company has until 4 November 2016 to do so.

The £111m deal was struck in June and saw Novomatic buy the Quicksilver AGC chain from Tatts Group. It would make Novomatic the largest AGC operator in the UK with a total of 264 outlets.

Sheldon Mills, the senior director of mergers at the CMA and decision-maker in this case, said that in most of the local areas where Admiral or Noble and Quicksilver gaming centres compete, the CMA found that there were other competing gaming centres as well as some competition from betting shops and bingo halls with gaming machines which compete with those in a gaming centre.

“Overall, we found that these combined alternatives would push Novomatic to keep offering a competitive service to its customers,” he added. “However, in five local areas we considered that there would be a significant loss of competition which could harm the quality of service offered to players.”

Mills added that Novomatic now has to come up with proposals that will keep gaming facilities competitive for customers in those areas and which would avoid the need for a full investigation.

In the other recent decision affecting the gambling sector in the UK, Ladbrokes and Coral were ordered to sell as going concerns 359 betting shops that the CMA found would be the cause of local competition issues if they were allowed to go ahead with the merger. The sale of those shops was completed in October allowing for the imminent merge of the two businesses.

Following the deal, Novomatic controls 264 AGCs, adding Talarius’ Quicksilver, Silvers and Winners brands to add to its own Luxury Leisure and Nobles estate of AGCs and family entertainment centres (FECs). This compares with a total UK AGC estate of 546 outlets as of March 2016 (according to the latest figures form the UK Gambling Commission), meaning Novomatic would control just under 50% of the market.

Totally Gaming says: The AGC sector is often overlooked within the UK gaming landscape but clearly not in this case by the CMA. What is interesting is that the CMA analysis clearly takes into account the varied nature of gaming on the UK high street, particularly when it comes machines.

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