The Co-op and Camelot face legal battle with scratchcard firm over ‘collusion’
The Co-op and National Lottery operator Camelot have been accused of “colluding” to restrict competition by a rival scratchcard firm.
Charitable lottery business Nektr said it will be taking both companies to the competition watchdog after it claimed its own displays were stripped from Co-op stores by its competitor, allegedly breaching its own contract with the retailer.
Craig Scott, co-founder of Nektr, said its dispute with the companies has cost it £1.5 million and “effectively killed the business”.
Nektr said it is taking the companies to court for damages in relation to the losses it suffered following the alleged “anti-competitive collusion”.
Both firms strenuously deny the allegations, with the claims being described as “wholly inaccurate”.
The smaller lottery operator said it agreed a deal with the Co-op in 2017 to launch a range of scratchcards that gave 22% of sales back to good causes.
Nektr said it launched the cards, under the Co-op branding in 2018, and was told that, despite some initial concerns from Camelot, the retailer was comfortable that the new scratchcard units did not breach its agreement with Camelot.
However, Camelot immediately complained to the Co-op after the scratchcard units were introduced to stores, the rival claimed.
Later that month, Camelot removed its National Lottery terminal from one store and switched off machines at another 38 stores where Nektr’s cards were in place, it said.
Nektr claimed that Camelot believed the rival displays were in breach of their contact because it was “unclear” they were not related to The National Lottery.
It said that shortly after this, the Co-op gave Camelot permission to remove the Nektr-owned units without its knowledge or permission, which it alleges is in breach of its contract with the supermarket firm.
Mr Scott said: “Both companies clearly had the objective of restricting competition.
“This situation has cost us a huge amount as a small company, and we will need to go back to shareholders if this is not resolved soon.
“We think both companies need to be held responsible because this whole thing has been bogus, so that is why we are planning to go down the regulatory route.”
Nektr said it is in the process of putting the case to the Competition and Markets Authority and also plans to raise its concerns with the Gambling Commission.
A Co-op spokeswoman said: “We care deeply about our relationships with suppliers and the accusation that Co-op has engaged in anti-competitive conduct and has colluded with Camelot is wholly inaccurate.
“Nektr terminated its contract to supply Co-op’s own brand scratchcards. We have written to Nektr’s solicitor but are yet to receive any response to our request that Nektr explains its case.”
A Camelot spokesman said: “It seems that you’ve been provided with a particularly one-sided story, containing a number of inaccurate claims. While we don’t comment publicly on the details of confidential dealings with individual retailers, we deny the allegations of any impropriety by Camelot.
“For the avoidance of doubt, Camelot has never had a problem with National Lottery retailers selling competitive products. Many already do – and have done for years.
“Our policy has always been that these products should be promoted or displayed in a way that makes it absolutely clear to customers that they are not associated with The National Lottery in any way, and that The National Lottery’s promotional assets and goodwill should not be exploited to divert sales to these competitive products.”