Acquisition-happy Game not anti-competitive
Green light for Gamestation deal
Game Group today learned that its acquisition of rival firm Gamestation has been formally cleared by the Competition Commission.
The Office of Fair Trading kicked off an investigation in August last year following claims that Game would nullify competition by merging with another games console group.
However, the commission said in a statement that the takeover of Gamestation, which Game bought from struggling US movie retail giant Blockbuster in May last year, was unlikely to "result in a substantial lessening of competition in the markets for the supply of gaming software, consoles and related accessories in the UK".
The commission said two members of the merger inquiry group, made up of four people, had disagreed with the conclusion in relation to the trade-in and sale of pre-owned gaming software. The split decision meant that the chairman, Dr Diane Coyle, used her casting vote in favour of a final clearance.
Game said today that it was "pleased" with the outcome. But having complied with the requirements of the commission inquiry, the retailer now has costs of £4.5m to clear.
The commission announcement came a day after Game reported strong console sales over the Christmas period.
It said in a trading update statement that total group sales were up by 76.3 per cent on a like-for-like basis for the year ended 31 January 2007. Excluding the newly-acquired Gamestation stores, the retailer said like-for-like sales had increased by nearly 32 per cent.
The firm's chairman Peter Lewis said Christmas sales had been "outstanding", buoyed by the popularity of Nintendo's Wii games console.
Game's board said it now expects to see pre-tax profit for last year, excluding costs related to the acquisition of Gamestation, to be at least £73m compared with £29.5m a year earlier.
But the company also warned that store growth was likely to slow and that it would be in the "low single digits" for the year ahead, although it added that its outlook for the next 12 months remained "confident".
Despite its bullish expectations for 2007, shares in the games retailer dipped more than 11 per cent this morning to 200 pence on the London Stock Exchange.
Game will cough up its prelim results on 22 April. ®