Tabcorp-Tatts $11 billion merger hearing commences

The hearing before the Australian Competition Tribunal for the Tabcorp-Tatts $11 billion merger commenced in Melbourne on Tuesday.

The Australian Competition and Consumer Commission (ACCC) opened the 14-day hearing which will allow the Tribunal to determine whether the deal should get the green light. As expected, the comments were not in Tabcorp’s favour stating it will overrun the wagering sector.

“Tabcorp would become, by a very significant margin, the dominant provider of wagering in Australia,” counsel for the ACCC, Andrew McClelland, QC, said yesterday.

The ACCC also took the time to counter Tabcorp’s attack on the watchdog saying it was “not connected to reality” and “the assertion by Tabcorp that the ACCC has engaged in speculative theories of harm is pejorative and without foundation”.

“By casting the ACCC as its opponent, Tabcorp appears to misunderstand the role of the ACCC in this matter,” it said in a submission.

The three-man tribunal, which is headed by Federal Court Judge, John Middleton, heard the number of conventional tote businesses, such as pubs and clubs, were declining from not just Tabcorp and Tatts, but the ACCC too. They added online fixed-odds betting, on the other hand, is incredibly popular.

But McClelland said while Tabcorp’s income was not increasing as fast as online bookmakers, it was still growing.

“Although retail wagering is in decline, its online sales are increasing,” McClelland said.

“It’s not clear to what extent corporate bookmakers are currently imposing a constraint on retail outlets.”

Counsel for Tatts, Rod Smith SC, was quick to point out the consequences if the deal is not approved by highlighting the potential decline in the tote business. He said if this occurred Tabcorp would be unable to support the racing industry via payments to racing bodies.

Smith was quick to point out the significant market share Crownbet – the James Packer-backed bookmaker which is opposing the Tabcorp-Tatts deal – has acquired since entering the market.

Crownbet’s company accounts reveal a revenue of around $157 million in 2016, with a marketing spend of around $79 million.

The first day of the hearing also addressed vision rights with the merger impacting the joint venture between Seven West Media and Racing Victoria, Racing.com, due to Tabcorp’s Sky Racing broadcasting deal with the other Australian states.

Online bookmaker, Sportsbet, which is also opposing the merged entity, says the media rights could result in a “lockdown”.

But Thoroughbred Racing South Australia chief executive, Jim Watters, said in a submission to the Tribunal that Tatts has never inquired about racing vision.

Racing Queensland chief executive, Eliot Forbes, and Racing and Wagering Western Australia chief executive, Richard Burt, who were both originally against the merger when the ACCC first raised concerns – before Tabcorp bypassed the watchdog and went straight to the Tribunal – have changed positions. They said supplementary information and talks with Tabcorp has lessened concerns.

Victorian Treasurer, Tim Pallas, also commented during the hearing suggesting that if the entity is to merge that it should remain in Victoria.

“We are proud to have had Tabcorp headquartered in Melbourne for many years,” he said.

“The company has made a significant contribution to this state.”

The hearing will continue for 13 more days with a result set for mid-June.