A PROPOSED $11 billion merger of Australian gambling giants Tabcorp and Tatts Group lies in limbo pending a Federal Court legal challenge by the Australian Competition and Consumer Commission (ACCC).
The merged companies would control about 90 per cent of Australia's totaliser betting and generate revenues in excess of $5 billion.
Based in NSW, Tabcorp’s three core businesses – Wagering and Media, Keno and Gaming Services – are delivered through retail, digital and Sky media platforms. The company operates market-leading brands such as tab.com.au, Keno, Luxbet, Sky Racing, Sky Sports Radio and Tabcorp Gaming Solutions. Tabcorp is also the largest funding contributor to the Australian racing industry providing $787 million in 2015/16.
Brisbane-based Tatts Group is Australia’s largest provider of wagering, lotteries and gaming in products and services. Its wagering division UBET operates across four state-based TABs – Queensland, South Australia, Tasmania and the Northern Territory.
The merger was granted regulatory approval by the Australian Competition Tribunal last month, after circumventing the usual direct approval process of the ACCC. The national competition watchdog (ACCC) has long voiced concerns about the partnership citing the potential for diminished competition for licences and broadcast rights.
The ACCC and Australian Competition Tribunal apply different tests when assessing a merger. The ACCC considers if there would be a substantial lessening of competition while the tribunal can authorise a merger if the public benefits outweigh the public detriments. The tribunal granted authorisation for the Tatts/Tabcorp merger last month, saying that the merger would create substantial public benefits and no material detriment.
Challenging the decision, ACCC chairman Rod Sims announced on Monday, July 10 that the commission had applied to the Federal Court for a judicial review of the decision. "The ACCC is alleging the tribunal made three reviewable errors. We are seeking judicial review clarification because we believe these legal principles are fundamental not only to the Tabcorp decision but to all future merger and non-merger authorisation assessments,” he said.
The three reviewable errors are:
- That the proposed merger could only be detrimental if there was a substantial lessening of competition. The watchdog says that the tribunal has in the past considered the detriment constituted by any lessening of competition.
- That in considering whether the merger was likely to cause detriment, the tribunal failed to compare the likely future state of competition both with and without the merger.
- The tribunal erred in the weight it gave to benefits such as cost savings and revenue synergies, which would benefit Tabcorp but not consumers generally.
Prior to the legal challenge, Racing Queensland CEO Dr Eliot Forbes recently commented that the proposed agreement would provide greater certainty for Queensland’s racing industry. “RQ signed a deed of understanding with Tabcorp in March to ensure that the merger would bring meaningful benefits to the Queensland racing Industry. The majority of our funding comes from the Queensland wagering business, so this agreement is important to underpin future returns,” he said.
As part of the Deed of Understanding, Tabcorp committed to an increase in capital investment in the Queensland wagering business (currently UBET) across retail and on-course wagering facilities, as well as committing to implementing increases in investments in technology, sponsorships and marketing.
Tabcorp notes ACCC announcement
TABCORP believes it is well advanced in addressing merger issues identified by the Australian Competition and Consumer Commission (ACCC).
Responding to the ACCC legal challenge, a Tabcorp media release states “Tabcorp Holdings Limited notes the Statement of Issues (SOI) released by the ACCC in relation to the proposed combination of Tabcorp and Tatts Group Limited. The SOI represents the preliminary views of the ACCC in relation to the proposed transaction and is not a final decision.
“Since it lodged its informal clearance application with the ACCC in November, Tabcorp has worked closely with the ACCC to assist it with its inquiries, including providing significant information to the ACCC. Tabcorp has also actively engaged with its stakeholders since the announcement of the transaction. Tabcorp will continue to review the SOI and assess its options to maximise the prospects of receiving competition approval for the transaction.
“Tabcorp believes that the proposed combination with Tatts will deliver value for both sets of shareholders, as well as significant benefits to other stakeholders across Australia including the racing industry, venue partners, customers and Governments.
The benefits expected to flow from the proposed combination with Tatts include:
providing a national footprint with an enhanced operational platform which will create a stronger financial base to support its stakeholders;
delivering additional funding to the racing industry and venue partners, which will flow to participants and related industries across Australia. This additional funding will create broader economic benefits, including in regional areas; and
a pathway to national pooling for parimutuel wagering, subject to regulatory and racing industry approvals and an enhanced ability to adopt strategies to address the national decline in parimutuel betting.”
Entries open for 2018 Magic Millions Yearling Sales
MAGIC Millions has announced entries are now open for the 2018 Yearling Sales Series around Australia.
The Thoroughbred sales company is coming off a record 2017 series which grossed more than $196 million – an increased return to breeders of almost $54 million in just two years.
"The impressive growth of Magic Millions Yearling Sales in 2017 began with the real support of our vendors. Again our achievements this year are a direct outcome of their trust and patronage. Since 2012 the overall Australasian yearling market has grown 58 percent. Over the same period breeders supporting the Magic Millions Yearling Sale series have enjoyed an 86 percent increase," Magic Millions Managing Director Vin Cox said.
With six yearling sales across four states, the sales series is complemented by the world's richest Race Series featuring the $10 million annual Gold Coast Raceday.
Entries are now open for the following auctions:
- Gold Coast Yearling Sale – January 10-16
- Tasmanian Yearling Sale – February 15
- Perth Yearling Sale – February 19-20
- Adelaide Yearling Sale – March 13-14
- Gold Coast March Yearling Sale – March 19-20
- Gold Coast National Yearling Sale – June 5-7
Entries close on Friday, August 11. For further information contact Magic Millions Bloodstock on (07) 5504 1200 or email@example.com.