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Fantasy sports merger stymied by Federal Trade Commission

Whether it's football, baseball or basketball, sports enthusiasts in California closely follow their favorite teams. And, part of the fun of being a sports fan for some is participating in online fantasy sports contests. These games, played on the Internet, allow players to put together their own fantasy team based on actual athletes, and then win money if their fantasy team beats other fantasy teams based on real-life games. Online fantasy sports became popular after an exception for them was carved out of a federal law enacted 11 years ago that made online gambling illegal.

Two online fantasy sports companies, DraftKings and FanDuel are trying to execute a merger. However, their efforts are being stymied by the Federal Trade Commission, which is filing an official complaint with regards to the desired merger. The FTC claims that, by merging, the companies would create a single entity that covers over 90 percent of the online fantasy sports market. The FTC wants to stall the merger until a November trial on the issue is held.

The Bureau of Competition claims that the merger would prevent consumers from having the benefits that come when two companies compete with one another in the marketplace. The companies have both released statements saying that they do not agree with the FTC's objections and are considering what steps to take next.

Time will tell whether this merger will be successful, but what is important to take away is that a potential merger cannot result in one company that covers a substantial part of the applicable market, with little to no competition. Since mergers are such complicated business transactions, it may be necessary to utilize the services of a corporate law attorney.

Source: NBC Los Angeles, "FTC Seeks to Block FanDuel, DraftKings Merger," June 19, 2017

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