Jamaica’s competition regulator, the Fair Trading Commission (FTC), has cleared regional lottery and gaming company Supreme Ventures Limited’s (SVL) acquisition of Champion Gaming Limited (CGL), declaring that the move will not lessen competition in the slot machine gaming market.

The FTC released its ruling yesterday following an investigation into the acquisition, which was initiated in December of last year and consummated a month later in January this year. This is the second such acquisition by SVL that the FTC has investigated and cleared the company.

In February this year, the FTC cleared SVL’s acquisition of Post to Post Betting Limited, citing minimal effect on competition in the racehorse, betting and gaming business. It ruled that “the acquisition agreements are unlikely to have the effect of a substantial lessening of competition in the bookmaking services market.”

The acquisition by SVL of CGL has resulted in strengthening its position as a significant market player in the slot machine gaming market. The FTC decided to take an interest in the transaction, as “the coming together of the two entities sees the largest market player in the slot machine gaming market, CGL, being acquired by SVL.”

FTC’S INVESTIGATION

The FTC’s investigation of the acquisition was to determine if it will have an adverse effect on competition in the market for gaming services to the detriment of consumers, as the merger may raise concerns under Section 17 of the Fair Competition Act (FCA). The investigation relied on information from the parties, rivals and the regulator, the Betting, Gaming and Lotteries Commission.

Interviews were conducted with various stakeholder groups with newspaper articles and various annual reports were consulted as a part of the investigation. In coming to its conclusion, the FTC noted that the relevant markets comprise slot machine gaming services in no more than 33 geographic locations in Jamaica.

ABSENCE OF CRITICAL DATA

However, the data available to the FTC did not allow for an assessment of the change in market concentration level in the various relevant markets arising from the acquisition. In its conclusion, the FTC highlighted that the absence of such data prevented it from assessing the prospects for unilateral and coordinated effects arising from the transaction.

As such, further analysis of market conditions was conducted to assess the likely effect of the acquisition on competition in the various relevant markets. The FTC has determined that even if the acquisition increased the likelihood for unilateral and/or coordinated effects, the easy conditions of entry in the various geographic markets would limit the incentives to engage in anti-competitive conduct.

“Accordingly, competitive entry is likely to mitigate, if not avert, such adverse effects on competition. As such, FTC concludes that the transaction is unlikely to have as the effect of substantially lessening competition in the relevant markets and therefore unlikely to breach section 17 of the FCA,” read a section of the 27-page ruling.

The FTC investigative staff recommended to its commissioners that the investigation be closed without any further action on the part of the competition regulatory body. Included in CGL assets, which were bought by SVL, were 1,346 slot machines, operated by CGL across 208 locations islandwide.

SVL at the time of the acquisition owned 179 slot machines across 29 locations islandwide.

In commenting on the acquisition then, SVL said the move is in keeping with its strategy to expand into new and existing market segments and product streams.

In addition, “the acquisition, will also enable better partnerships with small business owners who benefit significantly from the slot machine industry, providing a partnership with a stronger entity, and enabling better representation of their interests at the regulatory table,” SVL reported.