ACCC says public benefits from Tabcorp-Tatts deal is ‘overstated’
The Australian Competition and Consumer Commission (ACCC) has warned a number of public issues could occur following the $11 billion merger between Tabcorp and Tatts.
The pairing of the two Australian gambling giants has caused quite a stir in the past few months, with the Pacific Consortium attempting to get in on the deal twice but failing both times.
Now the Consortium seems to be out of the way, the ACCC has made one last attempt to stop the deal.
In a report to the Australian Competition Tribunal, the ACCC said Tabcorp has overstated the public benefits which will occur from the merger while reiterating the likelihood of weakened competition in the wagering and broadcast industries.
The overstated benefits include $130 million in savings a year, as well as more funding for racing bodies and a national pools system for parimutuel betting.
The ACCC believes instead it could be a “detriment to wagering customers” since “the revenue increases are expected to come from Tabcorp giving less to (and taking more from) Tatts’ fixed-odds consumers.”
“Whilst the proposed acquisition may result in some of the public benefits claimed, the magnitude and likelihood of the benefits are uncertain; and Tabcorp’s estimates may be overstated,” the ACCC said.
The ACCC avoided providing recommendations, which could be because Tabcorp bypassed the competition watchdog and went straight to the Tribunal. Tabcorp said it was to speed up the process.
But the regulator did reiterate the likelihood of just one bidder for wagering licenses in the future following the merger since it has “retail wagering and totalisator experience and expertise in Australia” and “sunk investments in retail and totalisator wagering”.
The ACCC added it “had not reached concluded views on all the issues the tribunal will need to consider”.
Tabcorp’ chief executive David Attenborough rebutted the claims in his submission to the Tribunal revealing there were five bidders, including Tabcorp and Tatts, for ACTTAB three years ago.
The ACCC also addressed broadcasting competition concerns in terms of Sky Racing, owned by Tabcorp.
The regulator detailed its position in the List of Issues presented to the Tribunal, where 14 concerns have been detailed for consideration.
“The proposed acquisition will result in the combination of Sky, the dominant broadcaster of racing content, with the totalisator/retail wagering operator in Tatts’ retail jurisdictions (Queensland, South Australia, Tasmania and the Northern Territory),” ACCC said.
“Therefore, following the acquisition, the merged entity would be vertically integrated as the dominant broadcaster of racing content and the totalisator/retail wagering operator in all states and territories (except Western Australia).”
The ACCC said the deal in association to owning “94 percent of racing content throughout Australia” would allow Tabcorp to influence and obtain rights deals.
“The likely flow-on effects for the racing industry include … lower fees paid to racing clubs for their media rights” and impediments to corporate bookmakers obtaining digital rights, the ACCC said.
The Tribunal will deliberate in the coming weeks as hearings commence later this month. A decision will be made in June.
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