The fate of the expected merger between Tabcorp and Tatts Group seems to be still unknown after it faced the official opposition of the Australian Competition and Consumer Commission (ACCC).
Back in October 2016, the two companies revealed their plans to combine their businesses in order to create a gaming conglomerate estimated to about A$11 billion. Unfortunately, the two companies have faced the objection of some parties who claimed themselves against the merger and listed a number of conditions that need to be met by the operators in order for them to get an approval for the deal.
Local media sources have reported that some opponents of the merger said in the Australian Competition Tribunal that the two company’s claims that the deal would bring significant benefits to the public were only speculations.
Andrew McClelland QC, Counsel for the Australian Competition and Consumer Commission (ACCC) strongly opposed the deal in the Australian Competition Tribunal and said that some of the revenue synergies did not exist. According to Mr. McClelland, the cost savings and revenue increase that were reported by Tabcorp as most-expected effects of the deal should not be given much attention.
That recommendation of the ACCC to the Australian Competition Tribunal comes at the end of a tough three-week legal battle. However, it does not bind the Tribunal in any way. The Tribunal is expected to officially announce its decision on June 13th at the earliest.
A few weeks earlier, in March 2017, the Australian Competition and Consumer Commission raised a red flag over some competition issues related to the proposed merger of Tabcorp and Tatts Group. The local watchdog expressed its concerns that the eventual deal would result in increasing the group’s influence in the market, which would hurt other companies operating there, especially in terms of racing media rights holders as well as dealings with licensed venues. That was exactly why the ACCC urged the Tribunal to ban the deal, saying that there were conditions that should be seriously considered before the merger is officially allowed.
Tabcorp appealed the recommendation of ACCC to the Tribunal, insisting that the deal was the only way for stand-alone operators that wanted to continue offering their services in the local market to remain in business. Cameron Moore SC, who appealed on behalf of Tabcorp insisted that mergers of small local players such as his client and Tatts Group was the only reasonable thing to do at a time when there was a material gap in the likes of large global operators such as Paddy Power Betfair and bet365.
In addition, Mr. Moore explained that the need for qualitative and innovative products was constantly rising both due to the fact that technology got more sophisticated and so did the customers’ expectations. According to him, it would be hard for small local players to meet the constantly increasing requirements of the market, so mergers and acquisitions deal would provide them with the chance to become more competitive.
As mentioned above, the recommendation made by ACCC has no binding power for the Tribunal, represented by Federal Court judge John Middleton and two members – Darryn Abraham and Grant Latta. The Tribunal is likely to present its decision at the beginning of the upcoming week.
- Author
Olivia Cole
