GAME merger given greenlight by Competition Commission
Second-hand sales proved to be the real sticking point of inquiry
The merger of High Street specialists GAME and Gamestation has been given the all clear by the UK's Competition Commission.
However, the sticking point for the inquiry was the subject of second-hand software sales, with the body revealing that the inquiry Chairman had to use her casting vote to give the merger the go ahead.
"There are fewer alternative retailers engaged in trade-ins and the sale of pre-owned [games]. However, we see that several competitors are expanding rapidly and customers are increasingly making use of alternative retail channels," noted Diane Coyle, chairman of the inquiry.
"We also found that competition for new gaming products effectively sets a cap on prices for pre-owned products, as customers could easily switch to new products sold elsewhere were the merged company to increase pre-owned prices.
"Two members of the Group disagreed with the conclusion in relation to the potential for a substantial lessening of competition with regard to the trade-in and sale of pre-owned gaming software. As this meant a split 2:2 verdict, the Chairman has exercised her casting vote in favour of a provisional clearance," said Coyle.
The amount and variety of retailers taking advantage of the lucrative game business was another reason for the provisional greenlight, with the Commission noting that there isn't a great deal of customer loyalty for retail brands.
"Even though customers view GAME and Gamestation as the next best alternative for each other, if the merged company was to raise prices, for example, we think it is likely that customers could move a significant amount of their business to alternative retailers such as independents, high-street retailers, supermarkets and Internet retailers.
"Customers appear to switch between different types of retailers to look around for the best deals," said Coyle.
The Competition Commission carried out research by speaking to various retailers – from specialist games stores to electrical, online and entertainment retailers.
Although the merger has been provisionally cleared, the final report is expected to be published by late January 2008.