Following news that UK retailer Game's prospective merger with Gamestation had come under scrutiny
of the UK Office of Fair Trading, the OFT has released a new document detailing precisely what the office will be investigating.
At the time, OFT chief executive John Fingleton had said “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 we can not confidently rely on new companies entering the market to resolve any issues quickly."
He also expressed that the issue must be brought to the Competition Commission “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."
In its latest documents the OFT says it has identified "four hypothetical and provisional theories of harm" related to the merger. The theories include "an increase in the market power of the merged entity in the supply of pre-owned gaming software and hardware" and "an increase in the market power of the merged entity for the trade-in of gaming software and hardware."
The OFT also has provisionally found "an increase in the market power of the merged entity in the purchase of gaming software and hardware such as to harm suppliers and their incentives to innovate, and/or to induce suppliers to discriminate unfairly in the allocation of products to the merged entity" and "an increase in the market power of the merged entity in the supply of mint gaming software and hardware."
The office also says it will be investigating six ways the merger might result in a monopoly, resulting in customers seeing an increase in game pricing, a reduction in game promotions, a reduction in the range of game products offered, quality of service offered, trade-in values for used products, and innovation by retailers and suppliers.
No final date for the decision has yet been set, but the newest document notes a September 27th date for anyone wishing to comment on the pending investigation.