The two biggest players on the Daily Fantasy Sports (DFS) arena – DraftKings and FanDuel – have filed their response to the Federal Trade Commission’s (FTC) concerns related to the companies’ merger.
The DFS operators have asked the Federal Trade Commission, the government agency which takes care of consumer protection, to give them the green light to bring their deal to end, claiming that the merger would not harm the Daily Fantasy Sports industry.
The two companies have utterly denied the possibility that their deal would have a negative impact on the direct competition. According to the operators, their long-awaited merger would actually help the local market, as it would bring great efficiencies, innovations and cost-savings, as well as other effects that would result in increasing the consumer value proposition.
In June 2017, the US Federal Trade Commission secured a temporary suspension of the deal, claiming that if carried out, the merger would make the fantasy sports market environment nearly monopolistic, which on the other hand would substantially reduce competition. The customer protection government agency also reminded that DraftKing and FanDuel have been competitors in the market since 2012, and over the years each of them have been seeking to offer more and better services than the other one, trying to attract more customers.
According to the US Federal Trade Commission, in case that the merger is carried out, both price and non-price competition would be eliminated, while the benefits such competition guarantees to players to bet on daily fantasy sports would be reduced, bringing massive consumer harm.
Despite that the company has recently revealed that its operating losses over the recent years had been estimated to about half a billion dollars, DraftKings is the largest DFS operator on the territory of the US. Now, the two operators of daily fantasy sports insist that their merger would not have any negative effects on the local market.
The FTC, however, cited certain antitrust concerns and explained that if the deal is finalised, the combined company’s market share would amount to approximately 95%, with its future dominance in the industry being described as a monopoly. DraftKings and FanDuel opposed these claims, saying that they lacked enough information and knowledge to form an opinion that would regard them as the two biggest DFS providers on the territory of the US.
DraftKings will be given the opportunity to present its arguments at a special hearing with the Federal Trade Commission, but that would probably happen after several months. The hearing has been scheduled for November 21st, which means that the possibility for the deal to be actually finalised within the initially-meant term that was set for the second half of 2017.
The case has been closely watched by many industry analysts, because it has been often described as one of the first real tests of anti-trust policy under President Trump’s administration. According to some experts, the only way for the two companies to survive the close reviews and monitoring is to try and prove to the Federal Trade Commission that their merger would be beneficial for everyone concerned.
- Author
Daniel Williams
