Topic: Merger of Major British Games Retailers to Go Ahead

[Yoshidious]

The £74 million GAME-Gamestation deal has been given provisional approval by the UK Competition Commission as concerns regarding the pre-owned software market are dismissed.
 http://www.nintendoworldreport.com/newsArt.cfm?artid=14940

 The merger of the UK’s two largest videogame specialist High Street retailers, GAME and Gamestation, will proceed after being cleared by the Competition Commission.    

The £74 million deal announced in May had been delayed following its referral to the Commission by the Office of Fair Trading in September. At that time OFT chief executive John Fingleton explained that "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 a market where retail sales amount to around GBP 1.5 billion - we must refer to the CC for fuller inquiry."    

Having conducted research by talking to various retailers, a crucial issue cited by the Competition Commission’s inquiry was that of competition in the trade-in and sale of pre-owned software. Two of the five members of the commission decided against approving the deal on the grounds that it would create significant monopoly power in this area. With another two members voting to the contrary it was left to inquiry chairman Diane Coyle to cast the deciding vote in favour of clearing the deal, concluding that though there are relatively few retailers involved in the second hand market "we see that several competitors are expanding rapidly and customers are increasingly making use of alternative retail channels."    

The commission also noted that in general they have not observed a high degree of brand loyalty amongst British gamers, rather they "appear to switch between different types of retailers to look around for the best deals" according to Coyle. On this basis the capacity for the merged GAME-Gamespot entity to extract surpluses from consumers by raising prices will be very limited. Furthermore competition amongst the many different outlets for new products effectively imposes a price ceiling on pre-owned software sales.    

The Commission’s final report on the merger will be published at the end of January.

[Plugabugz]

This will create a complete monopoly on gaming-only oriented shops here.

It's official. They're just as useless as OFCOM; they let off the ISP's when consumers (continue to) complain that "unlimited internet access" with a "fair usage policy" doesn't mean unlimited.