Tabcorp-Tatts merger raises ACCC’s concern

The Australian Competition And Consumer Commission (ACCC) will likely investigate the major merger between the two companies before its authorised.

Australia.- Tabcorp Holdings Limited’s plan to buy rival Tatts Group for US$4.44 billion has raised the national competition regulator’s concern due to the effect the merger could have on the country’s wagering, racing media and gaming industries.

The Melbourne-based company operates Australia-facing brands including Sky Racing and Tab.com and has a reported market capitalization of around US$3 billion. It has been planing to buy Tatts Group since November of 2015 and last October announced that the deal could be completed by next summer, subject to the receipt of necessary regulatory approvals including those from the Australian Competition And Consumer Commission (ACCC).

However, Chairman for the ACCC Rod Sims has stated that the amalgamation raises “complex competition issues in a range of different areas and industry participants have provided many differing views, all of which we will need to examine in greater detail.”

“The Australian Competition And Consumer Commission’s preliminary view is that the proposed merger is likely to substantially lessen competition in the supply of monitoring and other services to pokies venues in Queensland,” declared Sims. Tabcorp Holdings Limited replied to these concerns by providing the regulator with a divestment proposal that would see it unload its Queensland electronic gaming machine monitoring business, Odyssey, which the ACCC has put out for comment with a deadline of March 24.

Sims claimed that the concern about the merger is based in the fact that Sky Racing is the nation’s racing media content broadcasting leader and the deal “is likely to materially increase the market power currently held by Tabcorp in its dealings with licensed venues and racing media rights holders.” ACCC’s Chairman explained that the Comission is not only concerned about the lack of competition that there would be but also about how the proposed merger would affect the ability of competing wagering providers to obtain pooling arrangements, access to racing vision and other key inputs.