Following a complaint lodged by Betclic Everest Group with the French Competition Authority (FCA), the dominant betting provider, Pari Mutuel Urbain (PMU), proposed commitments on Oct. 30, 2013, to separate horse racing bets registered in physical outlets (bar-tobacco shops, newspaper stands, etc.) from those registered in its online horse race betting channel (Pmu.fr).
Since 1930, certain French companies have held a legal monopoly on managing horse races and bets placed on them. They manage this monopoly through an Economic Interest Grouping, the PMU. Since 2010, the French online gambling and betting sector, including online horse race betting, opened to competition and PMU has faced competition from eight operators, including Betclic. Despite market liberalization, PMU has been able to retain its dominant position in the online horse race betting market, with an 86 percent market share in 2012. In horse race betting in physical outlets, PMU maintains a monopoly.
Betclic’s complaint focused on PMU’s pooling into a single pot all bets recorded online and bets made in its physical network. According to Betclic, by so doing, PMU increases the attractiveness of its online horse race betting offer, threatening the existence of its online competitors.
This practice enables Pmu.fr to increase the pot for each bet. Bets collected at PMU’s physical outlets amount to €8,4 billion ($11.4 billion) while those collected at the web site amount to no more than €972 million ($1.3 billion). The pooling allows PMU to offer customers more attractive winnings, more stable odds, and more bets.
According to the FCA, the advantages Pmu.fr obtains from this practice do not represent competition on the merits; instead, the practice involves taking advantage, in a market open to competition, of a legal monopoly. In response to these concerns, PMU offered, over a period of 24 months and for each of the bets in question offered on Pmu.fr, to separate its betting pots recorded online from those recorded in outlets. Moreover, PMU offered to separate its marketing and commercial teams and its databases. Finally, it offered not to use its physical outlets network to promote its online activities.
In order to confirm the effectiveness of these commitments, the FCA has submitted the proposal to a market test. Further information on the investigation is available here.