by James Kilsby, gamblingcompliance.com
The Higher Regional Court in Dusseldorf has upheld an earlier ruling of August 2006 that the Deutscher Lotto- und Totoblock's regionalised division of the German lottery market constitutes a violation of both European and German law.
The German Federal Cartel Office ruled last year that the agreement between the 16 state monopoly lottery operators in German to restrict their operations purely to their own regions to avoid entering into competition with one another represented an illegal cartel, in contravention of both German and European anti-trust laws.
Private lottery operator FLUXX AG initiated proceedings against the Deutscher Lotto- und Totoblock once the group attempted to prohibit private lottery distributors from selling various state lottery products in gas stations and other outlets throughout Germany, i.e. outside of the lottery’s state of origin and therefore effectively in competition with the products of a ‘rival’ state monopoly.
“Private operators wanted to sell products from state lottery companies that paid the highest commission but the Deutscher Lotto- und Totoblock tried to ban commercial operators,” explains leading German gaming lawyer Martin Arendts. “The court has said that under this system the monopoly operators do not compete with each other and form a cartel. It is illegal under German cartel law to agree not to compete.”
The Dusseldorf decision means that the 2006 ruling will now come into effect and private lottery companies should be free to distribute state lottery products throughout the country. Arendts believes that the verdict has even broader consequences for the German gambling industry. “This is a very fundamental decision. It almost outlaws the Deutscher Lotto- und Totoblock which is a kind of illegal organization now,” he says.
A spokesman from the Deutscher Lotto- und Totoblock was unavailable for comment yesterday although Gamblingcompliance.com understands that the group has indicated its intention to appeal the decision in the Federal Court of Justice.
In a second Detailed Opinion on the draft Interstate Lotteries Treaty proposed by the German Lander in 2006, the European Commission emphatically highlighted that the treaty renewing the states’ betting monopolies and outlawing the use of the internet for all gambling services would be illegal under European law were it to be adopted. Arendts believes that the verdict in Dusseldorf on Friday will now further increase the pressure on the 16 state Prime Ministers to discuss alternative legislation at their next scheduled meeting on June 22. “They should discuss new regulation now,” he says.
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