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French Watchdog Demands Separation of Kindred Brands by FDJ Following Acquisition

By  |  November 18, 2024
France, startups, venture capital, investment, business

France’s competition regulator, the Autorité de la concurrence, has imposed conditions on the state-owned gambling operator La Française des Jeux (FDJ) following its acquisition of the Kindred Group. The regulator specified that FDJ must maintain a clear separation between its own brands and those of Kindred, ensuring the two businesses remain distinct after the acquisition.

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    FDJ launched a €2.45 billion bid to acquire Kindred in January, a strategic move poised to make it Europe’s second-largest gambling operator. In a statement to shareholders, Kindred endorsed the proposal as the “most attractive outcome for shareholders” following a comprehensive strategic review that began in April 2023.

    At the time of the acquisition announcement, FDJ clarified its operational intentions, stating it did not anticipate major changes to Kindred’s business. The one exception, according to a statement from the operator, would be its exit from Norway and other unregulated markets where there is no clear path to achieving regulatory compliance.

    Following initial approval from Sweden’s Financial Market Supervisory Authority in February, the deal moved to France’s competition authority for further examination. The Autorité de la concurrence reviewed the acquisition closely, citing recent changes in FDJ’s market position as a consideration.

    Related: France’s Competition Authority Greenlights FDJ’s Acquisition of Kindred Group

    In particular, the regulator noted that FDJ had completed its acquisition of ZEturf in October 2023 for €175 million. This acquisition substantially bolstered FDJ’s standing in the horse racing betting market. The regulator argued that this move, combined with the potential integration of Kindred’s operations, could lead to “conglomerate effects” that could pose risks to competition in France’s gambling sector.

    To mitigate these risks, the competition authority outlined specific commitments that FDJ must meet to proceed with the Kindred acquisition. The primary condition requires FDJ to keep its monopoly operations separate from its activities in competitive markets. This distinction is particularly important as FDJ holds exclusive rights to both online and land-based lottery games in France, including popular offerings like scratch cards and draw games. It also monopolizes land-based sports betting.

    However, FDJ also actively participates in the competitive online gambling market, providing services for online horse racing, sports betting, and poker. By requiring a separation of FDJ’s monopoly-protected activities from its competitive-market operations, the regulator aims to preserve fair competition and protect smaller market players.

    Source: Next IO