Bundeskartellamt prohibits anti-competitive behaviour by lottery companies

The Bundeskartellamt has prohibited the regional lottery companies and the German Lotto and Toto Block from violating German and European competition law in several instances. In detail the Bundeskartellamt has prohibited the companies from
• hindering commercial lottery agents from establishing stationary lottery collection points, e.g. in supermarkets and petrol stations,
• agreeing on dividing up the market geographically between the 16 German lottery companies and
• registering the stakes collected through commercial lottery agents with the aim of distributing them in a competitively neutral manner among the German Länder.
The decision is immediately enforceable.

The Bundeskartellamt has not addressed the issue of whether the state monopoly on lotteries and betting is justified vis-a-vis private providers such as Bwin. The authority’s investigation exclusively concerns the sale and distribution of the lottery companies’ “state” products as well as geographic market sharing among these companies.
In its decision the Bundeskartellamt firstly objects to the lottery companies’ conduct towards the so-called “commercial lottery agents”. Commercial lottery agents, such as Faber, Tipp24 or Jaxx, act as intermediaries between customers and lottery companies against payment of a commission. However, they do not themselves enter into any agreement with the customers. The commercial lottery agents originally confined their activities to the acquisition of customers via the Internet, by telephone or mail. Now they also intend to acquire customers through stationary lottery collection points, e.g. in supermarkets and petrol stations. The lottery companies have agreed not to accept any stakes collected through commercial lottery agents at these stationary collection points. The Bundeskartellamt’s decision prohibits the lottery companies from continuing this boycott. Under German and European law the lottery companies’ conduct constitutes an anti-competitive agreement, an illegal call for a boycott and an abuse of a dominant position.

The President of the Bundeskartellamt, Dr. Ulf Böge, stated: “The state lottery treaty explicitly allows the commercial distribution of state lottery products by private parties without determining or excluding certain distribution channels. It is not evident why it should be admissible to offer lotteries via the Internet, by mail or telephone, but not at stationary collection points.”

In addition the Bundeskartellamt has prohibited the lottery companies from restricting their activities by mutual agreement to the federal state in which they are registered. This geographic market sharing also constitutes a violation of German and European law and is therefore inadmissible.

President Böge: “The regulation laid down in the block contract represents a classic allocation of territory between the lottery companies and, like a price agreement, constitutes a particularly severe competition restraint. The Bundeskartellamt’s decision will stimulate competition among the lottery companies. This will be of benefit for the consumers who will be able to choose between the often diverging offers of all lottery companies.”

Finally the Bundeskartellamt has prohibited the lottery companies from using a comprehensive information system by which the Länder are informed in detail of the commercial lottery agents’ revenues with the aim of distributing these in a competitively neutral manner in proportion to the volume of other lottery revenue. Thus, ultimately, the stakes are allocated to the Land of which the lottery player is a resident. This restricts the incentive for lottery companies to conclude lottery agreements with customers across Länder borders and also consolidates geographic market sharing among the lottery companies.
The decision is available on the Internet at www.bundeskartellamt.de (in German).

The Bundeskartellamt’s decision can be appealed against within a period of one month.