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Fluxx AG: Higher District Court ruling has far-reaching consequences for the future of gaming in Germany

FLUXX AG / Miscellaneous

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- Experts in competition and European law predict end of the road for draft
State Treaty on gaming
- National law cannot override European competition law

Altenholz, October 26, 2006 – According to experts in competition and
European law, the ruling by the Higher Regional Court of Düsseldorf will
have far-reaching consequences for the future shape of the German gaming
market. On Monday, the Cartel Senate of the Higher Regional Court had
reinstated the immediate execution of the Federal Competition Authority's
ruling on lottery sales, confirming serious violations of competition law
by the German lottery and pools organisation as the reason for its verdict.

According to the EU and competition law expert Dr. Andreas Rosenfeld,
lawyer at the firm Redeker Sellner Dahs & Widmaier, the Higher Regional
Court's ruling is 'a clear reversal of fortunes, and possibly even the end
of the road - legally speaking - for the draft State Treaty on gaming.' In
conjunction with the strong opposition voiced by EU Internal Market
Commissioner Charlie McCreevy in the most recent issue of SPIEGEL, in legal
terms the debate is already over.

'The Higher Regional Court has made it perfectly clear that the new State
Treaty on gaming likewise has to measure up to the standards of European
competition law,' added Andreas Rosenfeld. 'This finding is nothing new; it
is in line with the regular legal position of the European Court of
Justice.' He explained how this clarification by the Higher Regional Court
makes a very important contribution to the continuing debate on the new
State Treaty on gaming, which envisages restricting the activities of
commercial agency activities. According to the Higher Regional Court,
national law cannot override European competition law. National financial
sovereignty is limited by the provisions of European competition law. The
Higher Regional Court therefore considers that the current Regionalisation
State Treaty, too, is in conflict with European law, because 'the thrust of
the treaty was to commercial gaming providers'.

The Higher Regional Court not only agrees with the ruling of the Federal
Competition Authority that commercial agents are entitled to use
terrestrial sales channels. The Higher Regional Court of Dusseldorf also
reaffirms the much more far-reaching fundamental findings of the Federal
Competition Authority. It deems the restricting of the sales territory to
the federal state of the corresponding state lottery company, both in the
State Treaty on lotteries that has been in force since 2004 and in the
draft new State Treaty on gaming, to be a violation of both national and
European competition law, and the lottery companies' territorial cartel
that the federal states are still envisaging to be impermissible. It calls
on the lottery companies must abandon the regionalisation of their sales
territories, and not hinder the activities of other lottery companies from
other federal states in their home sales territory. Rosenfeld continued:
'This means that for instance Westlotto is entitled to operate in Bavaria,
and conversely Bavaria's State Lottery Administration can operate in North

The Higher Regional Court is also going onto the offensive in tackling the
mantra-like use of the argument that averting danger justifies the
monopolistic structure of lotteries. It has declared that neither the
federal states' duty to avert danger nor their legislative expertise in the
field of gaming constitute either a legal or a logical argument for
preventing competition between the lottery companies. It added that it was
unclear to what extent the federal states would be hindered in their duty
to avert danger if the lottery companies were to be in competition with
each other.

Stefan Zenker
Tel. +49 40 85 37 88 47
Mail: stefan.zenker@fluxx.com

DGAP 26.10.2006 
Language:     English
Issuer:       FLUXX AG
              Ostpreußenplatz 10
              24161 Altenholz Deutschland
Phone:        +49 (0)431 88 104-0
Fax:          +49 (0)431 88 104-40
E-mail:       info@fluxx.com
WWW:          www.fluxx.com
ISIN:         DE000A0JRU67
WKN:          A0JRU6
Listed:       Geregelter Markt in Frankfurt (Prime Standard); Freiverkehr
              in Berlin-Bremen, Düsseldorf, Hamburg, München, Stuttgart
End of News                                     DGAP News-Service