There's plenty of competition say Commission
The merger of two of the largest videogame retailers looks set to be completed soon following approval from the Competition Commission.The Competition Commision get involved in the merger process when it's believed that a company may gain more than 25% market share and might prove anti-competitive. However, the Commission believes that there is still plenty of competition in the area.
“This is a finely balanced verdict but our provisional conclusion is that we do not believe this acquisition would give the merged company the opportunity to significantly raise prices or reduce service for new or pre-owned products, or to cut trade-in prices paid to customers,” said Diane Coyle, chairman of the inquiry.
“Even though customers view GAME and Gamestation as the next best alternative for each other, if the merged company was to raise prices, for example, we think it is likely that customers could move a significant amount of their business to alternative retailers such as independents, high street retailers, supermarkets and Internet retailers. Customers appear to switch between different types of retailers to look around for the best deals."
In September The Office of Fair Trading stated that there is no doubt that the combined entity would face competition from online retailers such as Amazon and eBay and from other B&M retailers such as Woolworths, HMV and Virgin in relation to new sales. However, 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 the OFT cannot confidently rely on new market entry resolving issues quickly.
There is a shortage of evidence at this stage in the analysis that competition from other suppliers will be sufficient to prevent the merged firm from raising prices, lowering trade-in values or cutting back services in a way that would harm consumers. The OFT therefore believes that the removal of Gamestation as a competitive specialist gaming retailer can be expected to give rise to an increase in prices of pre-owned gaming software, a lowering of trade-in values and/or a reduction in service to gaming customers.
GAME has paid £74 million to acquire the company.
