European Commission Investigates FDJ’s Alleged Monopoly
The European Commission launched investigations to determine whether FDJ violated EU laws. La Française des Jeux gave FDJ exclusive retail and lottery rights to operate in France for 25 years.
FDJ Granted Exclusive Retail and Lottery Betting Rights
The European Commission launched investigations on La Française des Jeux. The former state-owned operator gained full retail and lottery betting rights from France. Two parties suspected this to be a monopolistic move.
The Commission will investigate whether the move to grant these rights for 25 years after its privatization in 2019 violated EU laws. La Française des Jeux first held rights since its inception. But this was on an indefinite plan since it was a monopoly owned by the government.
The operator would later go into privatization in an initial public offering at a cost of €1.89bn. But the operator paid €380 million to allow it to continue enjoying rights to provide retail betting and lotteries for 25 years.
This move attracted complaints from two parties through the EC. Both parties accused the FDJ of violating EU rules on illegal aid by the state. The EU rules prevent member states from providing any form of advantage to specific industry sectors or specific companies, or companies found in certain regions.
These advantages include tax rates. But exceptions may be given depending on a specific case. One of the exceptions is in a monopoly owned by the government.
The European Commission to Verify the Claims
The EC released a statement saying it would start by verifying the remuneration. Whether or not it conforms with the prevailing market conditions. This will not exclude the possibility the move by the government could offer an unfair advantage to the FDJ.
The EC further added launching detailed investigations will give all interested parties a chance to present their arguments. It also added it will not prejudge the outcome of the ongoing investigations.
The FDJ also released a statement on the matter to pledge its full cooperation with the investigations launched by the EC. This cooperation includes furnishing the EC with necessary documents showing compliance with the French and European laws.
The FDJ reported a 5.2% year-over-year increase in its revenue for the first quarter. This was in May when the revenue collection settled at €537.6 million. The increase in revenue came despite the restrictions on land-based retail outlets occasioned by the COVID-19 pandemic.
The last few months saw the FDJ appoint Nadia Faure as the director of investor relations and M&A. La Française des Jeux also appointed Andy Wright as the new Sporting Group CEO.
The European Commission is also looking into another case of state aid. This time it involves Germany and the European Gaming and Betting Association. The latter lodged a complaint accusing the state of proposing a 5.3% tax on online poker and slots turnover. This constitutes unfair state-aid for land-based gaming.
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