Following the May acquisition
of Blockbuster's Gamestation outlets by UK based international retailer Game, Britain's Office of Fair Trading (OFT) has ordered that the deal by turned over to the to the Competition Commission on concerns of market monopoly.
OFT chief executive John Fingleton allowed that "Amazon, Play.com and eBay and more generalist retailers like Woolworths, HMV and Virgin" would still remain competitive following the merger, but still expressed concern over the deal.
“This merger involves the loss of competition between two parties who, in some segments at least, appear to be each other's closest competitors," said Fingleton, "and in circumstances where we can not confidently rely on new companies entering the market to resolve any issues quickly."
“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," he continued, "in a market where retail sales amount to about £1.5 billion – we must refer to the Competition Commission for fuller inquiry.”
In response, Game chairman Peter Lewis issued a statement, saying “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," he concluded, "and demonstrate how this transaction brings very strong consumer, commercial and employee benefits in what is an increasingly competitive market.”