Ladbrokes and Coral will have to sell hundreds of locations if they want to get together
Ladbrokes and Coral are the second and third-largest gambling outlets in the UK respectively, with Ladbrokes at just over 2,225 locations and Coral at around 850. Combined, they would surpass the current market leader William Hill, which has almost 2,400 stores.
The CMA said it has identified 642 areas where a merger would substantially lessen competition and this would lead to "a worsening of the offer made to customers at both a local and national level."
As such, both Ladbrokes and Coral "must sell around 350 to 400 betting shops to one or more suitably qualified up-front buyers," it added.
Martin Cave, inquiry chair, said that maintaining competition in physical locations was still important in the gambling industry:
"Although online betting has grown substantially in recent years, the evidence we've seen confirms that a significant proportion of customers still choose to bet in shops - and many will continue to do so after the merger. We therefore believe that a sale of shops of this scale is needed to protect these customers."
The news comes as William Hill ponders its own merger. Its shares jumped more than 11% on Monday morning when it emerged that Rank Group and 888 Holdings were interested in a deal.
But William Hill seemed keen to play down the possibility, saying in a statement that "it is not clear that a combination of William Hill with 888 and Rank will enhance William Hill's strategic positioning or deliver superior value to William Hill's strategy."
Ladbrokes did not enjoy a similar spike on the CMA's news this morning, but its share price was still slightly up:
