UK Competition Authority Investigates Sports Data Partnership Between Sportradar and IMG
The UK Competition and Markets Authority (CMA) has announced that it will reopen its investigation into Spreadex's purchase of Sporting Index, a decision that indicates a reconsideration of the initial decision made in March.
The CMA's decision comes after inviting comments in July about whether the acquisition could lead to a "substantial lessening of competition" within the UK goods and services market. The move follows on from the CMA's decision to attempt to block Spreadex's purchase of Sporting Index from FDJ due to concerns about competition in the spread betting sector.
The acquisition in question is the planned purchase of IMG Arena by Sportradar Group AG, a deal that was announced by Sportradar in March. The deal superseded a previously announced one where IMG would've been thrown in with OpenBet as part of a $450m management buyout. However, it appears that the Sportradar deal does not involve OpenBet as initially planned.
Sportradar will receive $125m under the deal, according to the companies involved. The businesses' Q2 reports show that Sportradar remains the largest sports data provider in the market, with revenue and EBITDA 2.7x and 1.9x, respectively, over its nearest competitor Genius Sports.
Spreadex, the acquirer in this case, later blasted the regulator's "irrational" decision in the case, claiming it ignored the commercial realities of a failing sector. The company expressed dissatisfaction with the CMA's decision, stating that it ignored commercial realities.
The CMA has stated that all parties will have the chance to respond ahead of a final report. If referred, the phase 2 process will culminate in an interim report. The CMA will make a decision after a 40-day phase 1 inquiry whether to refer the merger for a more in-depth investigation or otherwise let the deal proceed.
The merger inquiry is a significant development in the UK market, as it raises questions about competition and the potential for monopolies in the spread betting and sports data provision sectors. The CMA's decision to reopen the case will be closely watched by industry insiders and stakeholders alike.
