The acquisition of U.K. retailer GameStation by another major player in the local market, GAME is officially to be investigated by the Competition Commission following a referral by the Office Of Fair Trade (OFT) - leaving GAME's chairman, "disappointed".
We initially reported the deal on May 2nd this year under the headline, "GAME Swallows GameStation For £74 Million".
On May 4th this year, we reported the following statement made by GAME's chief executive, Lisa Morgan to industry journal MCV:
On June 4th this year, the OFT announced that it would be investigating the acquisition. At that time the OFT released a statement which included the following:
It now appears that by referring the deal to the Competitions Commission with an invitation for evidence (the relevant document can be read here), that OFT does indeed think that there might be cause for more than a little concern.
Responding to the news - via a press release - GAME's chairman, Peter Lewis, stated:
Lewis then pulled in the big guns - the figures - to prove the point.
“Since our AGM in July the PC and video games market has continued to experience strong growth. For the first 26 weeks to 28 July 2007, total Group sales (including Gamestation from 2 May 2007) were up by 78.7% and like for like (lfl) Group sales (excluding Gamestation) for the same period were up by 45.6%. In the UK and Ireland, total sales were up by 78.2% and lfl sales were up by 47.8%.
"In our International business, total sales and lfl sales were up by 79.9% and 39.5% respectively. We expect the group to report a net profit before tax of between £2m and £3m for the half year to 31 July 2007 (31 July 2006: loss before tax £7.1m), before non-recurring costs relating to the acquisition of Gamestation.
We're not entirely sure how this indicates that there is still strong competition in the High Street for games retail. With these kind of figures, however, what is certain is that, as Lewis points out, "Looking forward, GAME is well positioned to enhance customer choice and maximise shareholder value.”
What are your thoughts on the ongoing drama? Tell us in the Forum.
We initially reported the deal on May 2nd this year under the headline, "GAME Swallows GameStation For £74 Million".
On May 4th this year, we reported the following statement made by GAME's chief executive, Lisa Morgan to industry journal MCV:
"The deal will be subject to a regulatory review process and that will be an ongoing process during the first ten weeks. We have taken considerable advice in this area and we are confident and comfortable to proceed.”
On June 4th this year, the OFT announced that it would be investigating the acquisition. At that time the OFT released a statement which included the following:
"Should it be found to be a relevant merger situation, the OFT will further consider whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the UK for goods or services that warrants reference to the Competition Commission for investigation and report.”
It now appears that by referring the deal to the Competitions Commission with an invitation for evidence (the relevant document can be read here), that OFT does indeed think that there might be cause for more than a little concern.
Responding to the news - via a press release - GAME's chairman, Peter Lewis, stated:
“We are disappointed that the OFT found difficulty in clearing the transaction. 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.
GAME will cooperate fully with the Competition Commission process, and demonstrate how this transaction brings very strong consumer, commercial and employee benefits in what is an increasingly competitive market."
GAME will cooperate fully with the Competition Commission process, and demonstrate how this transaction brings very strong consumer, commercial and employee benefits in what is an increasingly competitive market."
Lewis then pulled in the big guns - the figures - to prove the point.
“Since our AGM in July the PC and video games market has continued to experience strong growth. For the first 26 weeks to 28 July 2007, total Group sales (including Gamestation from 2 May 2007) were up by 78.7% and like for like (lfl) Group sales (excluding Gamestation) for the same period were up by 45.6%. In the UK and Ireland, total sales were up by 78.2% and lfl sales were up by 47.8%.
"In our International business, total sales and lfl sales were up by 79.9% and 39.5% respectively. We expect the group to report a net profit before tax of between £2m and £3m for the half year to 31 July 2007 (31 July 2006: loss before tax £7.1m), before non-recurring costs relating to the acquisition of Gamestation.
We're not entirely sure how this indicates that there is still strong competition in the High Street for games retail. With these kind of figures, however, what is certain is that, as Lewis points out, "Looking forward, GAME is well positioned to enhance customer choice and maximise shareholder value.”
What are your thoughts on the ongoing drama? Tell us in the Forum.
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Comments
deleted 10 Aug 2007 17:53
1/1
If at the end of the day its benifits the consumer its all good, but if Game are using there power to up prices a little then stop it now, but i think its going to be fine, but i would like to see Gamestop come to the UK and introduce much needed high street competition.