FDJ Must Pay €97 Million to Keep French Monopoly Rights
The European Commission has ordered La Française des Jeux (FDJ) to pay an extra €97 million to keep its lottery and point of sale sports betting monopoly in France. The state aid investigation began in 2021.
European Commission Decision on State Aid
On October 31, The European Commission has published its findings on the complaints that FDJ had received unfair state aid following its privatisation in 2019. Although the Commission has found that FDJ did not receive any state aid, it has ordered the company to pay €477 million for its exclusive rights instead of €380 million.
The investigation started in July 2021 following allegations that FDJ’s 25 year monopoly price was too low and gave it an unfair advantage in the market. Two complainants argued that the price was too low and that FDJ was receiving state aid in breach of EU competition rules.
FDJ Reaction to the Decision
FDJ is pleased that the investigation is closed and that the Commission has confirmed the framework established during the privatisation. In a statement:
“We welcome the closure of this investigation and the European Commission’s confirmation, in line with the French Council of State’s decision of 14 April 2023, that the legal framework adopted when the group was privatised was robust.”
FDJ accepts the €97 million additional payment and notes that the new amount is in line with the one decided by the Participation and Transfer Commission in October 2019.
The additional payment will be recorded as an intangible asset in FDJ’s accounts and will be amortised over the remaining 25 year period of the exclusive rights, starting from May 2019. The company will pay dividends based on adjusted net income resulting from this change. It will book an additional €17.9 million of amortisation for the period 2019-2023, €37 million in 2024 and €19.1 million in 2025.
Shares Surge on Ruling and Growth
Following the announcement, FDJ’s shares closed at €39.16 on October 31, marking a 7.7% increase.
The decision highlights the broader industry debate about monopolies in the gambling sector. Some argue that monopolies like FDJ have an unfair advantage due to their brand recognition and customer databases.
The French Competition Authority had already warned FDJ, after its €2.45 billion acquisition of Kindred Group on October 4, to keep its monopoly activities separate from its commercial activities to prevent cross-selling and ensure fair competition.
The decision follows FDJ’s strong 9 months results. Revenue was up 11.9% to €2.10 billion, with strong growth in sports betting, iGaming and digital revenue up 39.3% year on year. If Kindred had been part of the group since the beginning of the year, total revenue would have been €2.8 billion by end of September.
