ACCC demands new review of Tabcorp-Tatts merger highlighting ACT review failuresby Joker 10.07.2017 0 comments
The Australian Competition & Consumer Commission (ACCC) has filed a federal court order demanding a ‘further judicial review’ of the AUS $11 billion merger of Tabcorp Holdings and Tatts Group Plc.
The Tabcorp-Tatts combination to form the ‘outright Australian gambling market leader’ was approved on 20 June by the Australian Competition Tribunal (ACT). However, the ACCC who acted as the original acting regulatory supervisory body for the merger, stated that it has a litany of concerns regarding the impact of the deal on market competition and consumer pricing.
Putting forward the court order ACCC Chairman Rod Sims states that ‘the ACT made three review errors’.
Sims detailed that the ACT had taken an unfair position reviewing Tabcorp-Tatts, by stating that its review body had to be ‘satisfied of a substantial lessening of competition’ in order to object to the merger.
The ACCC Chairman states that the ACT had been ‘inconsistent’ in its review approach, and should have taken into account a wider stakeholder impacts caused by ‘any lessening’ in competition caused by the combination.
The Commission stated that the review placed too high an emphasis on the benefits of corporate synergies and cost savings, which were favourable to ‘deal leader’ Tabcorp Holdings.
Furthermore, the ACCC states that at no point had the Tribunal forecasted the potential future impacts to Australian sports betting, lottery and gambling caused by the merger of Tabcorp-Tatts, missing a fundamental process in its review.
“We believe we had no option but to seek a review of these three, what we say, are reviewable errors, particularly because they set such important precedents for the decisions we have to make into the future,” Sims stated
Tabcorp governance has reacted to the court filing, issuing a short corporate statement detailing that it was aware of ACCC’s actions. At present, the company states that it will ‘provide further information as appropriate”
The merger of Tabcorp-Tatts has faced an arduous nine-month regulatory compliance process, In which a number of market competitors have highlighted concerns regarding the combination.
Following a rough opening to its full-year 2016/17 performance in which Tabcorp has been fined AUS $45 million by financial watchdog AUSTRAC for multiple compliance failures. Company governance has prioritised the merger at the forefront of its corporate goals.
Acting as merger lead Tabcorp governance has highlighted that the business combination expects to deliver $130 million a year in earnings through combined cost savings, which the company wants to enforce by the end of 2017.