After getting the green light by the Australian Competition Tribunal, the merger between Tabcorp and Tatts is in danger over an ACCC appeal.
Australia.- The Australian Competition and Consumer Commission (ACCC) has decided to file an appeal against the Australian Competition Tribunal’s (ACT) decision to allow Tabcorp and Tatts to merge their business, as they believe three reviewable errors have been made.
In mid-June, the ACT approved a future merger that is set to create one US$8.12 billion entity, since the body believed that both companies met all requirements. ACT president Justice John Middleton said last month that the companies would have the OK from the tribunal if Tabcorp sold its pokies monitoring business in Queensland called Odyssey Gaming. On its part, the company had already revealed that it would sell the business to Australian Federal hotels if the ACT approved the merger.
Nevertheless, the ACCC things that the reviewable errors need to be amended. ACCC Chairman Rod Sims said to the ASX on Monday: “It 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 official confirmed that they’re seeking judicial review because they believe that the legal principles are fundamental not only regarding the Tabcorp decision, but to all future merger and non-merger authorisation assessments.
One of the errors, according to the ACCC, is that the ACT doesn’t consider that the merger would weaken the competition. “The Tribunal’s failure to compare the likely future state of competition both with and without the proposed acquisition in its consideration of whether the proposed acquisition was likely to result in any detriment,” said the commission, when speaking about the second mistake made by the ACT. Moreover, they believe that the Tribunal failed to assess the benefits that the merger could offer, as they think that the advantages of the deal were wrongly judged by the Tribunal as well.
“The Tribunal made an error in the weight it gave to benefits, such as cost savings and revenue synergies, which would be retained by Tabcorp and not shared with consumers more broadly,” the ACCC said in a media release to the ASX on Monday. The ACCC will submit that the correct application of the statutory test required that the weight attributed to such private benefits be discounted relative to benefits that flow to consumers,” concluded Sims.
The merged business are set to get the control of 90 percent of the Australian betting industry, as it will also generate US$3.8 billion in revenues. Paula Dwyer, Tabcorp’s chairwoman, said that the decision is expected to deliver significant value for both sets of shareholders and material benefits to other key stakeholders, including Australian racing industries, business partners, employees, customers and governments.