Tabcorp and Tatts’ $11 billion merger proposal has received regulatory approval, which means the two betting giants could combine within a matter of months to form a dominant gambling powerhouse.
Not too dominant, though. And certainly not dominant enough to be considered an illegal monopoly.
This was the long-awaited verdict from the Australian Competitions Tribunal (ACT), which delivered its assessment on Tuesday, following a two-week hearing in which the merger’s fate, at times, seemed to hang in the balance.
There were certainly no guarantees of a green light before Tuesday’s decision was announced. While the tie-up was backed by the majority of the Australian racing industry, it was officially opposed by Racing Victoria, Racing.com, Crownbet, SportsBet and, crucially, the Australian Competition & Consumer Commission (ACCC).
Tabcorp had made the unusual decision of bypassing the ACCC assessment of the deal to head straight for the ACT; unusual because ACT is usually a last resort for mergers or acquisitions that have already been turned down by the ACCC.
But Tabcorp was spooked by a preliminary assessment in which the ACCC appeared to express reservations about the merger. Tabcorp clearly felt that it would have a better chance at the tribunal where racing stakeholders could voice their support in public.
But it also provided a platform for the “interveners,” dissenting voices, concerned that the proposed deal would reduce competition for betting licenses and media rights for racing clubs.
Sportsbet CEO Cormac Barry warned that the dominance of Sky Racing would mean that “collectively, [Tabcorp and Tatts] will be able to exert substantial pressure against every state and territory government and racing body in Australia.”
Meanwhile, the ACCC said that public benefits Tabcorp claimed would arise from a projected $130 million in cost-savings, post-merger, had been “overstated” and that public detriments “appear[ed] significant.”
The ACT disagreed.
“[As] the public detriments identified by the ACCC and the interveners are unlikely to either arise or are not of significance, the tribunal is satisfied in all the circumstances that the proposed merger would result, or would be likely to result, in such a benefit to the public that the acquisition should be allowed to occur,” said ACT president Justice John Middleton in delivering the verdict.
“The combination will bring together two great Australian businesses, well positioned to invest, innovate and compete in a global gambling entertainment marketplace,” Tabcorp chair Paula Dwyer said in an official statement.
“We look forward to continuing to work with Tatts to successfully complete the transaction and are working towards implementation in August 2017,” she added.
Interveners have 28 days to appeal against the tribunal’s decision.