“Believe me,” Joe says, “we don’t have the infrastructure to support that kind of growth.”Despite Joe’s good news, the Compaq-DEC merger could be interpreted differently. The deal dredges up memories of what Labour used to say in opposition – that Britain has been reduced to taking the crumbs from the high table of global economic consolidation.There is a home-grown British information technology industry It is tiny but kicking. It is the property of an upstart desktop computer company with close links to the despised Microsoft and Intel.
Joe McNally, managing director of Compaq UK, explains the difference this makes locally. LAST week, as Tony Blair prepared for talks with the sex fiend in the White House and Robin Cook got his knickers in a twist over his lover, the business pages reported a merger between two US computer companies. For the information technology world the purchase of Boston-based Digital Equipment Corp by Texas-based Compaq for pounds 5.3bn marked the end of an era. In its heyday, when computers were about mainframes and the Internet was the secret of the US defense department, DEC was second only to IBM Now it has become chattel. Larger, more flexible areas may be appropriate, resulting in Ladbroke being obliged to shed many more shops.The key to the eventual outcome may lie in the unique position of the Tote.

The Tote, ultimately controlled by the government for the benefit of racing, has three relevant qualities: Tote bets represent potential price competition to the bookmakers’ fixed odds and computer forecast bets; the Tote’s profits are invested in racing; the Tote lacks, and wants, a national network of betting shops.q David Ashforth is senior reporter of Sporting Life.. That alone makes it necessary to reconsider the 440-yard criterion. Ladbroke’s betting shop estate is set to expand from 1,904 to 2,609 shops, while the Tote’s will move up to 346 from 212.But the game is not over The concerns of 1989 apply more forcibly in 1998. The merger between Hills and Mecca was a much smaller affair; the union of one company owning 9 per cent of betting shops with another owning 8 per cent. That was considered enough to warrant a referral to the MMC.It could be argued that Ladbroke’s market sham has now reached a level sufficient in itself to warrant a referral on public interest grounds.There are more specific anxieties – the fear that Ladbroke may be able to exert greater influence over the odds offered to punters, and that the already very limited price competition will be reduced still further.Since 1989, the number of betting shops has fallen from an estimated 9,800 to approximately 8,500.

Mr Meale said: “I have yet to meet an MP who believes the deal should be allowed to go through. I have put down an early day motion opposing it and will be seeing the relevant ministers to voice our opposition. It cannot be in the interest of consumers.”Ladbroke’s apparent confidence stems from advice obtained from the OFT in advance of their unconditional bid. The advice was to apply the same criteria that were applied by the MMC when it reported on the merger of Hills and Mecca.On that occasion, the MMC concluded that the relevant arena for assessing competition was the local market.

It accepted GrandMet’s contention that “competition between betting offices should be considered on the basis of a 440-yard radius from any betting office”.The result was highly satisfactory to GrandMet and would be equally welcome to Ladbroke. They have identified 134 shops caught in the net and sold them to the Tote for over pounds 41m. Now, punters face the Big Two, with Ladbroke and Hills responsible for 48 per cent of shops and over 60 per cent of turnover.These are figures that have “referral” stamped firmly across them, and a group of MPs led by Labour’s Alan Meale are campaigning to block the takeover. During the year ended 31 March 1997, a total of pounds 6.7bn was staked with off-course bookmakers – approaching 70 per cent of it on horseracing.Ladbroke already own 22 per cent of Britain’s 8,600 betting shops, with Corals owning another 10 per cent.