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District Court of Rotterdam upheld ACM's decision to clear lottery merger

District Court of Rotterdam upheld ACM's decision to clear lottery mer

District Court of Rotterdam upheld ACM's decision to clear lottery merger

01.08.2017 NL law

On 27 July 2017, the District Court of Rotterdam dismissed the appeal brought by Lottovate Nederland B.V. and Stichting Speel Verantwoord against the Dutch Authority for Consumers and Markets' (ACM) clearance decision in the lottery merger. The District Court confirmed that by resorting to a regression analysis the ACM had used an academically sound method to assess the nature and degree of competition between the merging parties. Using this method, the ACM correctly concluded that competition between the merging parties was very limited.

In December 2015, after a Phase II investigation, the ACM cleared the merger between Stichting Exploitatie Nederlandse Staatsloterij (SENS) and Stichting Nationale Sporttotalisator (SNS) [see our January 2016 Newsletter]. According to the ACM, competition between the merging parties was very limited and customers would not easily switch from one party to the other when (sales) conditions changed. This is mainly a result of strict regulation, which required companies in each market segment to apply for a specific licence. As a consequence, every license-holder on the market operates within its own market segment (with its own range of games and target audience) and there are limited incentives to compete with other segments. For these reasons, the ACM concluded that the merger would not significantly impede effective competition on both the lotteries and lottos market, and the potential online market.

Lottovate and Stichting Speel Verantwoord appealed the ACM decision by arguing, among other things, that the ACM (i) erroneously left open the precise market definition and (ii) did not appropriately examine the effects of the merger on the markets for lotteries and lottos.

On the first point, the District Court reiterated that defining the relevant market is a starting point and tool for analysing market power, but it is not a goal in itself. It is established practice for both the ACM and the European Commission to leave open the exact market definition if the concentration does not raise competition concerns under any plausible market delineation. The District Court concluded that the ACM had sufficiently substantiated why the precise market definition could be left open in the case at hand.

On the second point, the District Court found that the ACM had appropriately analysed the market data and concluded on solid grounds that competition between the notifying parties was very limited. The Court found that the appellants arguments against the scope of the ACM's study were unfounded and effectively rebutted by the ACM. The District Court more generally considered the method used by the ACM ('regression analysis') as valuable and academically sound. The accuracy of that method had also been confirmed by an independent economic expert. Furthermore, the ACM sufficiently explained why it chose not to take into account the results of a study into consumer preferences.

Overall, the District Court concluded that the ACM's clearance decision should be upheld.

This article was published in the Competition Law Newsletter of August 2017. Other articles in this newsletter:

1. Court of Justice dismisses Toshiba's appeal against the gas-insulated switchgear fine
2. Recent enforcement action demonstrates an increasing focus on compliance with procedural EU merger rules
3. Trade and Industry Appeals annuls fine imposed on real estate traders
4. ACM closes probe into Fox over live-soccer TV rights due to lack of evidence of consumer harm
5. District Court of The Hague rules on ACM's powers to select and inspect digital data

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