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The clearance by Italian competition authority of the merger between SNAI and Cogetech opens new scenarios for major gaming transactions that have been rumored for long time in Italy.
As anticipated in this post, it seems that the season of M&A transactions has just started in Italy. I have been receiving tons of calls from analysts asking for predictions on potential regulatory restrictions to future acquisitions, but – given that the gaming market is new to such type of deals – the position to be taken by competent authorities is uncertain.
The decision of the Italian competition authority
The main deal of 2015 in the Italian gaming market has been so far the acquisition by SNAI of Cogetech which according to SNAI’s press release created the largest listed entertainment group in Italy reaching a 15% market share in the AWP and video lottery market and consolidating its leadership in the sports betting and horse betting market.
The Italian competition authority has now reviewed the deal and reached the conclusion that
the betting and gaming markets are part of the same market
under a competition law perspective because of the flexibility in the demand of such products and because the products are replaceable on the side of their offering. Indeed, according to the authority, betting and gaming products appear to customers as variations of the same service. But, despite of such circumstance, the Italian competition authority reached the conclusion that the merger was not able to impair competition in a substantial manner.
And this clearance has now been followed by the approval of the transaction by the Italian gaming regulator as well.
What happens for the future of the Italian gaming market?
The main point of the decision of the Italian competition authority is that it considered the gaming and betting markets to be part of the same market. This means that, in the view of future transactions in the Italian gaming market, it is likely that – unless further valid arguments are submitted to support the opposite view – the competition authority is likely to consider the combined market share of companies offering any gaming and betting product for the calculation of the impact on competition of potential transactions. And such conclusion might affect the future strategy of major operators in the market aiming at consolidating their market position.
We will see what is going to happen in the next months, but this is certainly an exiting time in the gaming market.
