15 December 2020

Dutch appeal court approves lottery merger

On 10 November 2020, the Dutch Trade and Industry Appeals Tribunal ("CBb"), the highest administrative law court in the Netherlands, confirmed the clearance of Stichting Exploitatie Nederlandse Staatsloterij's ("SENS") acquisition of Stichting Nationale Sporttotalisator ("SNS").

Both SENS, which is ultimately owned by the Dutch state, and SNS have permits to provide specific types of gambling services on the Dutch market. In its judgment, the CBb found that the Authority for Consumers and Markets ("ACM") correctly decided to unconditionally approve the merger, because it would not significantly impede effective competition.


The ACM had originally cleared SENS' acquisition of SNS in 2015. After the merger, the merged entity, Nederlandse Loterij B.V., would hold a 52% market share while its only competitor, Nationale Goede Doelen Loterij ("GDL"), would hold a 48% market share. Following a Phase II investigation, the ACM concluded that there was only limited competition between the parties before the proposed acquisition due to strict gambling regulation in the Netherlands.

The ACM's decision was appealed by lottery operator Lottovate and online lottery industry foundation Stichting Speel Verantwoord ("SSV"). After the Rotterdam District Court dismissed the appeal, SSV brought the case before the CBb arguing that the ACM (i) was wrong to make no final decision as to the market definition and (ii) did not examine the merger's effects as thoroughly as it should have.


On a preliminary procedural point, the CBb found that the ACM's decision not to share confidential information with SSV did not infringe SSV's rights. According to the CBb, the access that SSV had to non-confidential documents allowed it to sufficiently defend its view before the CBb. Additionally, the CBb had sufficient access to the confidential information to assess SSV's claims.

On the first argument regarding the market definition, the CBb confirmed that the ACM had sufficiently justified its decision to leave open the market definition. The CBb reiterated that defining the relevant market is not a goal in itself and that it is the established practice of the ACM and the European Commission not to provide an exact market definition if a merger does not raise competition concerns under any plausible market definition.

On the second argument regarding the thoroughness of the analysis, the CBb ruled that the ACM correctly considered the fact that the competitive pressure between the parties was very limited before the proposed acquisition due to Dutch gambling regulations. The regulatory framework limited competition on important parametres such as the number of lotteries allowed to operate, prices and the percentage of an operator's revenue that can be spent on prize money. Moreover, the parties were active in different market segments. Expansion into each other's market segments was difficult as each specific gambling product requires a separate permit. These permits are hard to get. The CBb confirmed that the limited competitive pressure was a given based on the regulatory framework and that extra scrutiny is not required in such cases.

Regarding the ACM's economic assessment, the CBb ruled that the econometric analysis used by the ACM (the 'regression analysis') was sufficient to substantiate its conclusions, when combined with its review of the parties' internal documents and input from retail chains regarding substitution between products. The ACM did not have to consider other evidence because it had conducted sufficient research of its own.

The CBb finally found that the ACM correctly concluded that it would be unlikely that the merged entity would be able to leverage its market position in offline gambling into the new online gambling market. This point was raised because online gambling will be legalised in the Netherlands from March 2021. Based on experiences in Belgium and Denmark, the ACM had concluded that incumbent monopolists in offline gambling markets in those countries face competitive pressure from international competitors in online markets.

The CBb thus rejected all SSV's claims and upheld the ACM's clearance decision. This judgment is final.


The judgment is interesting because it:

  • highlights and approves the ACM's increased focus on parties' internal documents;
  • confirms that the ACM can take the effects of regulation into account, especially in cases of strictly regulated markets such as the gambling market;
  • confirms that the ACM is not required to grant access to confidential data used for its competition analysis to third parties, as long as the CBb can verify from the data that the ACM's analysis is correct;
  • approves the established practice of the ACM and the European Commission to ultimately leave open the precise market definition when a concentration does not raise competition concerns under any plausible market definition; and
  • confirms that the ACM has leeway to substantiate its conclusions with its own investigation when faced with contradictory evidence provided by third parties.

This article have been published in Houthoff.

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