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Federal Trade Commission, Two AG's Aim to Stop DraftKings, FanDuel Merger

22 Juin 2017

The FTC is planning to file a legal complaint against the planned merger of online fantasy sports sites FanDuel and DraftKings, saying that it would eliminate competition in the market space.

Combining the onetime rivals would "deprive customers of the substantial benefits of direct competition", said Tad Lipsky, acting director of the commission's Bureau of Competition.

"The FTC is committed to the preservation of competitive markets, which offer consumers the best opportunity to obtain innovative products and services at the most favourable prices and terms consistent with the provision of competitive returns to efficient producers".

DraftKings and FanDuel agreed to merge in November after major marketing battles against each other and then jointly versus state lawmakers as many states ruled Daily Fantasy Sports to be gambling rather than games of skill.

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The federal court complaint alleges that paid daily fantasy sports contests in the United States represent a distinct antitrust product market. The FTC claims that entry or expansion by other providers is not likely to provide timely or effective new competition.

"DraftKings and FanDuel are each other's most significant competitor".

Very little detail was provided when the merger was announced, except that the new company will be a 50/50 split of the two parties, with an even number of Board members (plus one independent) coming from each company.

The grounds for complaint are that the newly formed company would control more than 90% of the USA market for paid daily fantasy sports, and that players would no longer be able to benefit from competition between the two with regard to prizes or variety of games.

Federal Trade Commission, Two AG's Aim to Stop DraftKings, FanDuel Merger