On Monday, Camelot issued a statement in which it claimed that its proposals to provide commercial services – rejected by the National Lottery Commission (NLC) – could yet see the light of day following the so-called ‘remedies’ that it put to the NLC. It also claimed that retail opinion was firmly on its side. Both claims are false.

The NLC’s conclusions, supported by independent legal advice, were that Camelot’s proposals posed a significant risk of breaching competition law and that it would be
expensive and complex to investigate this further.

The NLC pointed out that the benefits to Good Causes from the proposals were negligible relative to those raised by the National Lottery, and not worth the effort given the many competition and other risks that they raise. We believe that Camelot’s proposals would not raise any money for Good Causes for years until the new commercial services business became profitable.

Camelot’s remedies ignore these problems in favour of a promise of ‘transparent accounting’, effectively an admission that what it has proposed so far is not transparent. Its proposal is based on unfair cross-subsidies and leveraging its position as a state-protected monopoly. Camelot also suggests appointing an internal ‘compliance officer’ to keep it in line – a hardly convincing concession when it is the only party in denial about the anti-competitive nature of its proposals. Camelot’s final ‘remedy’, a competition law condition within the National Lottery licence is meaningless as it is already obliged to comply with competition law, and restating the obligation in its licence doesn’t go any way to solving the problem that Camelot’s proposal breaches that obligation.

In terms of retail opinion, the fact is that over 90% of the input made by retailers to the NLC objected to Camelot’s proposals. And, while not wishing to take sides, the three trade bodies also expressed their concern that Camelot should not be allowed to exploit a double monopoly position.

• The Association of Convenience Stores told the NLC: “the setting of margins cannot be dictated by Camelot’s potentially doubly powerful commercial position in relation to its retail customers”.
• The National Federation of Retail Newsagents told the NLC that, while not opposed in principle, the proposal has “potential for Camelot to become an extremely powerful operator in bill payment and mobile phone top-ups, with this power being reinforced by the link to its National Lottery operations”. It added: “Retail margins in bill-payment and mobile phone top ups are already very fine and it is therefore a legitimate concern that the strength of Camelot’s position…could lead to an unfair downward pressure on retailer margins and terms.”
• The Rural Shops Alliance told the NLC: “There is a danger that a new operator would start off by offering retailers better levels of payment to get established but then to reduce them in order to retain their own profitability.”

The National Federation of Sub-Postmasters has made it clear that it supports Camelot’s proposal as a means of weakening commercial competition to the Post Office. We believe its position is a disservice to the thousands of sub-postmasters who do not have the National Lottery and for whom bill payment is an important revenue stream. It is significant that the only submissions to the NLC from subpostmasters were against Camelot’s proposal.

We understand that some retailers may feel that they don’t always get everything they want from existing suppliers and that Camelot’s proposals may lead to short term commission increases as they buy market share. However, these promises are illusory and there is no reason to expect any commission offer to be sustained and every reason to fear having to negotiate with a potential double monopoly.

We have received significant support from retailers and thank them for that. We remain committed to our retail partners and to making further significant investment in developing our portfolio of services, payment schemes and operational improvements to increase retailers’ sales and support their businesses.

ENDS…

Contact:

PayPoint: Peter Brooker
01707 600300

Finsbury: Rollo Head/Don Hunter
020 7251 3801