Austrian gaming equipment manufacturer Novomatic has abandoned an attempt to increase its stake in local casino operator Casinos Austria following a ruling from the nation’s Federal Competition Authority regulator.

Gumpoldskirchen-based Novomatic already controls nearly 40% of Casinos Austria, which was established in 1967 and operates the central European nation’s twelve casinos including Casino Velden, and February saw it form a partnership with Czech casino firm Sazka Group in hopes of acquiring a further eleven percent. The proposed deal would have given the consortium a majority stake in the partially state-owned Casinos Austria and its Austrian Lotteries business but this has now been thwarted by the federal authority due to concerns over competition.

“Despite months of negotiations with the Federal Competition Authority, Novomatic, Europe’s leading gaming technology group, could not come to a consensus over the requirements to acquire part of Casinos Austria,” read a Thursday statement from Novomatic. “The [Federal Competition Authority] denied the merger because it would allegedly restrict competition.”

Novomatic operates more than 235,000 gaming devices and video lottery terminals in over 1,600 outlets including gaming parlors and casinos and declared that it had offered to make changes “in the areas deemed relevant” by the Federal Competition Authority in hopes of getting the proposed deal over the finishing line. However, it stated that the regulator had additionally demanded that it make “structural changes” to its business in the Czech Republic, which encompassed the offloading of some locations, while any video lottery terminals subsequently operated by Casinos Austria would have been subject to restrictions that brought “significant economic disadvantages to both companies”.

“Unfortunately, it has become evident that the [Federal Competition Authority] and the experts appointed by the [Federal Competition Authority] have adopted a viewpoint that has precluded any solution that would be economically feasible for Novomatic,” read a statement from Harald Neumann, Chief Executive Officer for Novomatic. “Most of the requirements called for would not be commercially viable for [Novomatic] and would thwart the positive development of Casinos Austria.”

Novomatic, which recently reported a 10.8% increase year-on-year in its six-month turnover to $1.23 billion, stated that it now intended to “strategically reevaluate” future investments in Austria and was reserving the right to appeal against the Federal Competition Authority’s ruling.

“Until the last moment, we fought for a solution that would have been viable for everyone concerned,” said Neumann. “In order to avert substantial economic disadvantages for the company, we could not accept the requirements demanded of us. What is especially unfortunate here is that an Austrian solution has failed. Moreover, player protection across channels and companies would have been made possible along with positive fiscal effects.”