$8.4 Billion Tabcorp-Tatts Merger Under Threat as Regulator Launches Legal Challenge
Posted on: July 10, 2017, 04:00h.
Last updated on: July 10, 2017, 02:13h.
The proposed merger of Tabcorp’s and Tatts, Australia’s two biggest wagering firms, faced a fresh hurdle on Monday as the Australian competitions regulator (ACCC) launched legal action in an attempt to capsize the deal.
In a completely unprecedented move, the ACCC has applied to the country’s federal court for a judicial review of a recent regulatory decision that green-lit the $8.4 billion merger.
In approving the deal last month, the Australian Competition Tribunal (ACT) dismissed concerns from the ACCC about the combined company’s overreaching market dominance.
It also rejected official opposition from Australian-facing online bookmakers like CrownBets and SportsBet, as well Racing Victoria, the governing body for racing in the State of Victoria.
90 Percent of Tote Market
The ACT concluded that the tie-up represented “substantial public benefits.” This is despite the fact the combined companies will control about 90 per cent of Australia’s parimutuel betting market and around 60 percent of the betting market as a whole, with revenues of over $3.8 billion per year.
But the ACCC believes the tribunal made three errors in its ruling, which left it with “no option” but to seek a review, according to ACCC chairman Rob Sims.
The review is all the more important because its outcome will “set such important precedents for the decisions we have to make into the future,” he said.
Three Big Mistakes
First of all, the ACCC says the tribunal erred in thinking that there had to be a “substantial” lessening of competition in order for it to be considered “detrimental.” Any lessening of competition should be enough to cause concern, said Sims.
The tribunal also failed to accurately compare the future state of competition with an without the merger, a “fundamental” flaw in its thinking.
And third, it was too willing to accept Tabcorp’s argument that cost savings created by the merger would be used for the pubic good.
The betting giant claims that the tie-up would create around $98 million in savings that would create more funding for racing bodies and extra pooling for parimutuel betting.
But the ACCC has argued that the projections maybe overstated and, while savings may be good for Tabcorp and Tatts, there’s no guarantee they will be good for customers in the long run.
“[ACCC] is therefore seeking clarification of these three points of law,which are central to the tribunal’s assessment of Tabcorp’s proposed acquisition of Tatts.”
The move sinks all chances of the merger being finalized within weeks, as Tabcorp and Tatts had hoped, and raises the possibility that it may be completely stopped in its tracks.
Related News Articles
Related News Articles
January 5, 2022 — 7 Comments—
December 9, 2021 — 5 Comments—