WASHINGTON (Reuters) - The U.S. Federal Trade Commission said on Monday it will seek to stop the merger of DraftKings and FanDuel, because the combined company would control more than 90 percent of the U.S. market for paid daily fantasy sports contests.
The FTC, along with the attorneys general of California and the District of Columbia, will file a complaint in federal district court seeking a preliminary injunction to block the deal, the antitrust regulator said.The companies said in a joint statement that they were considering their legal options. "We are disappointed by this decision and continue to believe that a merger is in the best interests of our players, our companies, our employees and the fantasy sports industry," DraftKings Chief Executive Jason Robins and his FanDuel counterpart, Nigel Eccles, said in the statement.This is the latest setback for two companies, which have faced regulatory challenges in several states. They announced the deal in November 2016 as a merger of equals that would cut their legal bills.Between them, the two companies have 95 percent of daily fantasy sports, according to data from Eilers and Krejcik Gaming LLC. DraftKings and FanDuel have argued that they compete against larger, more powerful companies in the broader fantasy sports business, like ESPN and Yahoo."This merger would deprive customers of the substantial benefits of direct competition between DraftKings and FanDuel," said Tad Lipsky, acting director of the FTC’s Bureau of Competition. The FTC will ask for the preliminary injunction to prevent the companies from closing the deal while it proceeds with an internal review to determine if the merger is legal under antitrust law. In practice, if companies are slapped with a preliminary injunction, they normally terminate a merger because deals cannot be held together during the lengthy internal process.The FTC has won a long list of court fights to stop deals of all sizes in recent years. Most notably, the agency stopped food distribution giant Sysco Corp