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Pools merger referred to Competition Commission

This article is more than 16 years old

Attempts by the owner of Littlewoods Pools to buy its biggest rival Vernons hit a snag yesterday when the Office of Fair Trading referred the proposed tie-up to the Competition Commission.

Sportech, which bought Littlewoods Pools in 2000, revealed in March that it had entered exclusive talks with Ladbrokes about the acquisition of its Vernons Pools business. The OFT said a tie-up would mean Sportech owning all three football pools operators in since it owns Zetters.

Simon Pritchard, OFT director of mergers, said a deal would create a monopoly supplier and he voiced concerns that football pools players would face higher prices or lower payout ratios after the merger.

"Many pools players switched to the National Lottery after its 1994 launch but remaining customers are mostly dedicated players spending almost £80m a year," he said. "Other evidence before us clearly supported the large number of consumer concerns we received, and suggested that too few of these customers would switch to alternatives to discipline Littlewoods if it reduced value for money."

The Competition Commission will now investigate and is expected to report by mid-October.

The two companies' attempt to merge reflects the tough market for pools operators for more than 10 years. The business has suffered a gradual decline and lost millions of players since the arrival of the National Lottery and more recently the proliferation of online gaming in Britain.

Littlewoods has about 500,000 people playing a week, most of whom still buy their coupons on the doorstep from a network of collectors. Vernons, which only operates via the internet, over the phone or by direct debit, has 200,000 players. According to Sportech, Littlewoods Pools peaked at 8 million players and Vernons at 2 million just before the National Lottery began.

Littlewoods Pools was established more than 80 years ago when the late John Moores printed 4,000 coupons and handed them to fans outside Old Trafford before a Manchester United match. Sportech bought the business for £160m and has the rights to use the Littlewoods name until 2010.

Sportech said it was disappointed by the OFT's decision and it promised to make a further announcement once it had considered what action to take.

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