Tribunal ignores competition concerns, backs Tabcorp-Tatts deal

June 20, 2017 2:17 pm.by Sarah O'Brien

WEAKENED competition concerns were dismissed by Justice John Middleton as he approved the Tabcorp-Tatts merger on Tuesday.

The Australian Competition Tribunal, headed by Justice Middleton, handed down the decision at the Federal Court in Melbourne with just one condition attached to the approval.

The single condition is not based on any of the recommendations suggested by the those who gave evidence during the Tabcorp-Tatts 14-day Tribunal hearing.

Instead, it is based on an outstanding condition already proposed by the Australian Competition and Consumer Commission (ACCC).

Tabcorp must proceed with the divestiture of Odyssey, its Queensland electronic gaming business, in order for the $11 billion mega gaming business deal to go through.

In a statement on Tuesday morning, Justice Middleton said the Tribunal “is satisfied” the merger will “result in substantial public benefits”.

This is despite the detriments highlighted by the ACCC and other objectors to the merger, including CrownBet, during the hearing.

Justice Middleton acknowledged the detriments but said they were “not of significance”.

He went on to say “the Tribunal is satisfied in all the circumstances that the proposed merger would result, or would be likely to result, in such a benefit to the public that the acquisition should be allowed to occur.”

The merger approval has been quite a lengthy process given Tabcorp announced its interest in acquiring Tatts in October 2016.

Tatts ended up deeming Tabcorp’s offer the best on the table after considering a bid from Pacific Consortium. The Consortium then revised its bid in one last attempt to take over the wagering, lotteries and gaming provider earlier this year, but Tatts rejected it again.

The Australian gambling giants did speed the process up by ignoring the informal process of awaiting the ACCC’s verdict.

While the regulator did have time to voice its concerns, including the issue of weakened competition in the gambling industry and the issue of Odyssey, Tabcorp ignored the concerns and went straight to the Tribunal.

The ACCC may or may not have given the merger the green light, but it is likely its opposition during the 14-day hearing was due to Tabcorp bypassing the regulator.

Before the hearing commenced in mid-May, interested parties were asked to submit their stance. Racing.com, Racing Victoria and CrownBet were all granted leave to intervene.

When the hearing kicked off, supporters and critics submitted their arguments to the Tribunal.

Prominent arguments against the tie-up included vision rights in relation to Sky Racing and pubs and clubs which want to team up with alternative betting companies and the creation of a national tote pool.

The latter issue is a result of Tabcorp operating the Victorian and New South Wales TABs, while Tatts runs the Queensland, South Australian, Australian Capital Territory, Tasmanian, and Northern Territory totalisators.

The companies both own fixed odds markets – Tatts controls UBet and Tabcorp runs Luxbet.

The only state the merged entity will not have a monopoly over is Western Australia as the TAB is owned by the government.

Talks the state government may sell the WA TAB puts the merged entity in the position to have complete national tote monopoly.

But WA’s Premier Mark McGowan has raised doubts about its sale due to the revenue it provides the state.

Supporters of the Tabcorp-Tatts tie up ranged from Racing Queensland to Racing and Wagering Western Australia.

Both of the state racing bodies did raise objections at first but during their submissions they said talks with Tabcorp reduced concerns.

But the ACCC was not convinced and in its closing statements it formally advised the Tribunal against approving the merger, after it revealed the merged entity could end up charging punters more on weekends.

The documents uncovered by the ACCC involved Project Alfred, which would see Tabcorp increasing its prices on the weekends, and reducing them during the week. Tabcorp was asked to present these documents to the Tribunal.

Still, the ACCC was prepared for the potential approval of the merger and advised the Tribunal to consider a number of conditions.

The conditions included the “exclusivity in relation to media rights”, as well as allowing 20 key pubs and clubs to continue broadcasting Sky Racing vision even if an issue arises.

Racing.com also requested the Tribunal to consider the condition Tabcorp-supplied pubs and clubs could broadcast Racing.com in the venues and sought assurance Sky Racing would not get “first and last” vision rights in broadcasting deals if the deal was approved.

The Tribunal then ended the hearing and a verdict was expected to be handed down on June 13. But the three-person Tribunal announced it would be extending the decision period until September.

This resulted in a number of rumours to spread including the suggestion Tabcorp may have to sell its Sky Racing broadcaster in order to get the deal to go through.

But on June 20 the decision to approve the two biggest gambling giants in Australia was announced without the inclusion of one condition suggested by concerned parties during the hearing.

The Tribunal is expected to publish its reasons on June 22.