Tabcorp/Tatts merger cast further into doubt after commission opposition
Regulatory authorities have thrown yet another spanner into the works of the proposed merger between Australian lottery operator Tatts Group and Tabcorp after the Australian Competition and Consumer Commission (ACCC) formally voiced its opposition to the proposed deal.
Tabcorp and Tatts have been embroiled in an uphill struggle to complete the merger for the better part of a year after agreeing a A$11bn merger in October 2016. The proposed merger was referred to the Australian Competition Tribunal by Tatts/Tabcorp after regulatory delays and has been the subject of a three-week legal battle in the Australian courts.
In hearings before the tribunal reported by The Australian newspaper, counsel for the ACCC Andrew McClelland QC refuted claims that the merger would be of significant benefit to the public and that resulting cost savings were “inherently implausible” and “speculative”.
McClelland said: “Although Tabcorp has asserted that some of these cost savings and revenue increases will flow through to the community, the majority of the claimed synergies are proposed to be retained by Tabcorp and should be given little weight,”
Opposing Tabcorp counsel Cameron Moore claimed that the merger was vital to the long term future of both parties, saying: “There is a really material gap now in the likes of Bet365, Paddy Power and Betfair at a global level, and what are effectively becoming small local players like Tabcorp and Tatts.”
Moore added: “As technology gets more sophisticated, the investment required to create the quality product increases.
“It is going to be very hard for them to compete because they have a much smaller customer base to get a return from that investment.”
Although the ACCC recommendation places the deal in jeopardy it is not legally binding, with the final decision due to be announced by the Australian Competition Tribunal on 13 June.
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