Australian federal court delays Tabcorp/Tatts $7bn merger

The odyssey between Tabcorp and Tatts continues, as the Australian federal court has now ruled for a review of the $6.9bn deal.

The move had previously been given the green light by the Australia Competition Tribunal and both corporations announced a few weeks ago that the merger was soon to be closed. However, the concerns raised by the Australian Competition and Consumer Commission (ACCC) in conjunction with the casino operator Crown Bet about the impact on Queensland state's gambling services were sufficient to refer the case to federal court.

The ACCC welcomed the move, saying it believed the tribunal had not properly tested the competition risks and had not given enough weight to the impact on consumers. “We are pleased that the full federal court has set aside the decision, however the reasons for the decision are not yet public,” said ACCC chairman Rod Sims.

He added: “The ACCC’s application for review was based on three grounds. The first was the tribunal’s reasoning that it could only find that the proposed acquisition was likely to result in a detriment to be considered in the net benefit test if it concluded that there would be a substantial lessening of competition.

“The second grounds were that the tribunal made an error when it failed to compare the likely future state of competition both with and without the proposed acquisition in order to assess competitive detriment.

“Finally, the ACCC argued that the tribunal had made an error in failing to assign less weight to benefits which would be retained by Tabcorp, its shareholders and the racing industry, and not shared with consumers more broadly.”