Tabcorp attacks Australian Competition Authorities over Tatts merger
The proposed A$11bn merger between Tabcorp and Australian lottery operator Tatts Group took an ugly turn today when Tabcorp accused the Australian Competition and Consumer Commission (ACCC) of siding with the merger’s opponents.
In preliminary hearings before the Australian Competition Tribunal (ACT), Cameron Moore, senior counsel for Tabcorp said that an ACCC report published in April proved that it had clearly sided with the merger’s opponents by unfairly claiming that the merger’s benefits were overstated.
Under the terms of the deal Tabcorp is required to submit to investigation by the ACCC before any proposed merger can take place. Delays in the investigation by ACCC regulators caused Tabcorp to call for Federal Court authorities to conduct a hearing into the deal and the ACCC’s role in it.
The delay also resulted in the aborted submission of a rival takeover bid by Pacific Consortium, a bid which was later rejected by Tatts Group.
Tabcorp had claimed that a combined Tabcorp/Tatts entity would bring numerous public benefits, delivering annual savings of A$130m.
However this claim was disputed by the ACCC report which said that “the size of the claimed savings is likely to be overstated because, for example, they include economic transfers and exclude integration costs. Economic transfers, for example the merged entity’s ability to negotiate improved terms from suppliers, are not a public benefit.
“It is unlikely Tabcorp’s claimed revenue increases represent a reasonable measure of public benefits. This is because gross revenue of itself is not an appropriate measure of economic welfare or surplus. Much of the claimed revenue increases are unlikely to be merger specific (they could be achieved by Tatts without the proposed acquisition).”
Three of the most vocal opponents – CrownBet, Racing Victoria and Racing.com – have been called as expert witnesses during the upcoming hearings into the merger. All three have argued that a completed merger between Tatts and Tabcorp would result in a significant loss of competition within the Australian gambling industry.
Moore claimed that the opponents of the merger were trying to protect their own interests rather than those of the entire industry and should not give testimony at the deal review hearings.
The full Federal Court of Australia hearings take place over the next fourteen days with the Australian Competition Tribunal set to announce its final decision on 13th June.
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