At the time of the purchase, the Office of Fair Trading in the U.K. announced it would investigate the purchase to ensure consumers would not be negatively impacted by the loss of competition between the companies. While it was assumed the investigation would be a routine matter, the OFT said today the acquisition would require a closer look.
“This merger involves the loss of competition between two parties who, in some segments at least, appear to be each other’s closest competitors and in circumstances where we cannot confidently rely on new companies entering the market to resolve any issues quickly,” said OFT Chief Executive John Fingleton. “Without better evidence that competition from other suppliers will be sufficient to prevent the merged firm from raising prices or cutting back services in a way that would harm consumers – in a market where retail sales amount to around £1.5 billion – we must refer to the CC for fuller inquiry.”
In response, GAME Chairman Peter Lewis issued a statement indicating his disappointment with the decision. “We firmly believe that a combination of GAME and Gamestation will not give rise to any substantial lessening of competition and intend to vigorously pursue this position before the Competition Commission.”
According to its website, the OFT “had a duty to make a reference to the CC if the OFT believes that it is or may be the case that a relevant merger situation has been created; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”