Spreadex has said the sale of its acquired Sporting Index assets would be an “appropriate remedy” to the spread betting monopoly concerns raised by the UK Competition and Markets Authority (CMA).
The CMA has released responses to its proposed remedies that suggested either Spreadex selling all or part of Sporting Index, as well as any of Spreadex’s existing assets being included in a potential deal.
These responses from Spreadex and Star Racing have been made public, with the latter, the company behind Star Sports, indicating it would be interested in acquiring the Sporting Index assets.
The CMA first raised fears over a potential monopoly in February after Spreadex acquired Sporting Index from La Française des Jeux (FDJ) in November 2023.
As part of its investigation into the matter, the regulator issued the proposed remedies in July, with Spreadex having now agreed the total sale of Sporting Index would be an appropriate solution.
The Spreadex submission notes the business would be prepared to give interested parties the benefit of a transactional services agreement (TSA) to help operate the acquired Sporting Index assets as it takes ownership.
This would mean the “purchaser makes the investments required to build up the personnel and functions that it does not currently have to operate the business in the manner that Sporting Index operated it pre-merger”.
However, Spreadex said it would “not be proportionate” to offer a TSA that supports a potential buyer in the manner it has operated the business since acquisition.
While the Spreadex submission includes a raft of redacted points, the St Albans-based firm said it would not be able to recreate the “back-end solution based solely on the source code in its possession for the pre-merger Sporting Index platform”.
Spreadex argued the “experience, know-how and complementary infrastructure” to recreate such a solution is tied up in Sporting Index’s sister brand, Sporting Solutions.
The issue, Spreadex contested, is Sporting Solutions is to be sold by FDJ to Betsson, with neither party likely to provide assistance to Spreadex to build out a platform based on original source code.
On the second potential remedy of including some existing Spreadex assets in any sale, the business dismissed the suggestion outright.
Spreadex said: “Requiring the inclusion of any Spreadex assets in the divestiture package would not be reasonable or proportionate. It would also make the remedy much more complex and it would take much longer to implement.
“[That proposal] would also cause significant harm to Spreadex’s business and therefore to Spreadex’s customers.”
Star Racing’s proposal
In Star Racing’s submission, the business confirmed it would be interested in acquiring assets, albeit in a package that would need to be “creative and diverse”.
Star Racing said: “Star’s principal concern here, to be discussed with the CMA, is the state of the Sporting Index asset portfolio.
“We already know that Spreadex has released most of the Sporting Index workforce, however, there is less clarity around assets such as customer lists and platform technology. We also have fears over the damage to the Sporting Index brand that has been caused.”
Under Star Racing’s proposal, the operator has said it would require the five staff retained by Spreadex when Sporting Index was acquired, as well taking on existing Spreadex staff to make a viable platform.
These staff would come from senior management, risk, marketing, IT, compliance, customer service and trading.
Additionally, Spreadex assets would be included in any deal, which Spreadex said in its own submission was not a feasible option.
Under Star Racing’s plans should it acquire the Sporting Index assets, the group would dissolve its existing Star Spreads spread betting service and migrate the workforce to Sporting Index.
Star Racing added that if the pre-merger Sporting Index platform cannot be recreated, a clone of the Spreadex system could be deployed.
Spreadex refuted the use of a clone of its tech as it would be “vulnerable to significant technical risks and could result in the failure of a number of aspects of the cloned system”.
What’s next?
The CMA will spend the rest of September studying the remedy responses before a final deadline for all parties’ responses and submissions to the investigation comes in late October or early November.
The body has set a statutory deadline of 26 November.
Those steps form part of the phase two level investigation involving an independent panel chaired by former Vodafone Group head Richard Feasey.
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