LOTTOMATICA-SISAL
PRESS RELEASE
PRESS RELEASE
THE COMPETITION AUTHORITY HAS FINED LOTTOMATICA AND SISAL FOR HAVING CONCLUDED AN AGREEMENT ON THE GAMING AND BETTING MARKET
At its meeting on 25 November 2004 the competition authority resolved to close the investigation into the Lottomatica S.p.A. and Sisal S.p.A. companies, and imposed fines on them of EUR8 million and EUR2.8 million, respectively.
The Authority had commenced proceedings in July 2003 in order to ascertain whether or not the two companies had concluded agreements to share the gaming and betting market between them, in violation of section 2 of the Competition Act.
The investigation had revealed that Lottomatica and Sisal had divided the whole of the highly concentrated gaming and betting market, which characterised by high administrative barriers market. The aim was to defend their established market shares from competition against each other, and from any potential competition from betting shops and their distribution network. The market was divided, in particular, by an agreement not to compete directly with each other through the main products of Lotto and Superenalotto, and by their joint management of the other betting shop games (the former Coni games, Tris, Formula 101). By jointly managing these, the parties had prevented any products other than the main ones currently available from not only giving rise to mutual competition, but also from opening up the market to other operators. For example, when tendering for the management of the betting system formerly owned by Coni, the parties acted in a way that was intentionally designed to prevent two competing operators from joining this market segment (Formula Giochi and G-Tech).
The investigation showed that the collusion between them had created a highly restrictive effect on competition at all levels of the industry. First of all, their agreement had effectively excluded third-party operators from the market, and more specifically it had prevented other operators from setting up a network of betting shops that could have brought effective competitive pressure to bear on their activities. Furthermore, as far as competition between the two parties was concerned, the agreement enabled Lottomatica and Sisal to defend their respective market positions which were guaranteed by Lotto and Superenalotto, even to the detriment of the products that they jointly managed. Lastly, as far as the effects on the betting shop operators and the consumers were concerned, having avoided competing with the purpose of securing for themselves the affiliation of the betting shops they deemed to be most remunerative, they had failed to attract the betting shops by making them offers which, in the ultimate analysis, would have brought benefits to the end consumers. The control that the two parties exercised over the distribution networks had also considerably restricted the freedom of financial choice on the part of the betting shop operators, who were prevented from freely deciding on their own provider when the tender was held for the betting games previously managed by Coni and, in more general terms, when deciding whether to join the network of a potential third operator who would have been able to offer them more attractive terms and conditions.
The Authority considered the offence to be extremely serious for a number of reasons relating to: a) the position of the parties that committed it, as the two leading operators on the market, and the only ones with nationwide network coverage; b) the fact that both parties knew that their conduct was potentially anti-competitive; c) the environment for which the agreement was devised, namely, a highly concentrated market on which the parties refused to compete against one another; e) the shut-out effects of their agreement.
To ascertain the seriousness of the offence, the Authority took into account the period of time covered by the agreement, which began in October 2001 and continued even after the investigation had begun.
For these reasons, the Authority resolved that the conduct by Lottomatica and Sisal were in serious violation of section 2 of the Competition Act and imposed the fines indicated above.
The Authority ordered both companies to immediately cease their anti-competitive conduct, and to notify it of the remedies adopted within 90 days. The Authority also reminded them that such measures must be able to remove any binding link between them and the betting shops, both with regard to the collection of bets placed on sports events and with regard to the possibility open to them to affiliate with new market operators when the franchiser held future competitive tenders.
Rome, 7 December 2004