French Competition Authority orders PMU to separate its online horserace betting activity from its physical point of sale network

By Gabriele Accardo and Aurelia Magdalena Goerner

On 25 February 2014, the French Competition Authority (“AdlC”) issued a decision (available only in French) making legally binding the commitment of Pari Mutuel Urbain (“PMU”), the holder of a legal monopoly over horserace bets placed in physical outlets, to separate its online horserace betting activity (“Pmu.fr”) from its point of sale network.

In essence, PMU has undertaken to separate, by September 2015, the pool of bets registered online from the pool of bets registered at physical outlets.

The investigation followed the complaint of Betclic a competitor in the online horserace betting space.

According to the AdlC, the aggregation of the bets, i.e. the fact that PMU can pool into a single pot all the bets made online and in physical outlets, strengthens the attractiveness of Pmu.fr’s online horserace betting, by offering much higher winnings than its online competitors – to the extent of threatening their existence:

  • PMU is the only operator able to offer an online bet on the arrival in order of five horses, known as the Quinté +, for which the potential winnings are very high.
  • Because of its larger betting pot resulting from the aggregation of all online and offline bets, the PMU is in a position to guarantee online gamblers very stable odds and therefore to accept on Pmu.fr all bets by betters with no limits on amounts, which it could hardly do if only online bets are considered since a major bet can cause any change to the odds on any given horse;               
  • PMU is in a position to expand its online horserace betting offer without significant change to the betting pot of existing bets, and can thus preserve the stability of odds and winnings.

Conversely, Pmu.fr’s competitors are unable to provide such an attractive offer because they do not have the resources at their disposal which the monopoly has over betting in physical outlets. In fact, PMU’s market share of 85% in 2013 underlines its ultra-dominant position in the online horserace market.

According to the AdlC, the practice of aggregation was therefore liable to lead to a risk of marginalization and the eviction of its online competitors, as well as becoming a barrier to entry into the online horserace betting market, possibly in breach of Article 102 of the Treaty on the Functioning of the European Union.

To address the competition concerns identified by the AdlC, PMU proposed the following commitments, which the AdlC has accepted following various rounds of consultations with stakeholders:

  • By 30 September 2015, PMU shall separate the pool of bets registered online from the pool of bets registered at physical outlets.
  • PMU will not use its database of clients at its physical outlets to induce them to place bets on its online site Pmu.fr.

Once the separation of the two betting pools has taken place, Pmu.fr and its competitors will only be able to use the respective horserace betting stakes of online gamblers. In particular, it will no longer be possible, as it is currently the case, for PMU to offer online winnings as high as on the Quinté +, winnings which could only be financed by the resources of the monopoly over the physical outlets.

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