Tabcorp is taking an unconventional path towards regulatory approval for its proposed $11 billion merger with the Tatts group.
In an odd twist on Monday, the betting giant withdrew itself from the Australian Competition and Consumer Commission’s (ACCC) informal review process, despite receiving positive signs last week that the merger would be green-lit. Instead, it has applied directly to the Australian Competition Tribunal (ACT) for approval.
The ACCC is the competition watchdog, charged with protecting fair competition for the benefit of consumers and preventing the creation of monopolies, or companies that are likely to become too dominant within one market, through mergers or otherwise.
The move to bypass the ACCC and head straight for the ACT is unusual because the latter is usually a last resort for companies that have already been rejected by the former. But in this case, the ACCC has not rejected the deal, and far from it.
When the tie-up was first announced last year, many wondered whether a marriage between Tabcorp and Tatts would create a betting superpower that was so dominant in the market that the watchdog would balk at the prospect.
But last week, in its Statement of Issues, the ACCC said it believed the increased competition provided by foreign online bookmakers in the current betting landscape means “recreational customers will continue to have choice about where to place their bets.”
The deal had just vaulted a huge hurdle and looked to be well on the way to approval, but Tabcorp clearly isn’t taking any chances and something within the Statement of Issues seems to have spooked the board.
The ACCC, for example, raised questions about the broadcasting of racing through Tabcorp’s SKY Racing channel, and whether the union of the two companies will increase Tabcorp’s market power in its dealings with licensed venues and racing media rights holders.
Let the Industry Speak
Tabcorp believes that going straight to the tribunal will hasten the approval process and that it will also allow racing industry stakeholders to offer testimonies of support for the deal. The industry stands to receive more funding if the merger goes ahead and is largely standing behind it.
The company said Monday that the ACCC process was “limited to assessing whether a proposed acquisition is likely to substantially lessen competition, and is not able to take into account countervailing public benefits.”
“After careful consideration of the statement of issues, Tabcorp believes the merger authorisation process will deliver greater transaction certainty,” said Tabcorp chief executive David Attenborough in an official statement. “It enables public benefits, including our strong funding relationship with the racing industry, to be taken into account.”