Tabcorp-Tatts merger in doubt after ACCC opposes deal
The planned merger between Tabcorp and Tatts Group is in danger of collapse after the Australian Competition and Consumer Commission (ACCC) formally opposed the deal.
In October last year, Tabcorp and Tatts unveiled plans to join forces in a deal that would lead to the creation of a combined business worth approximately A$11bn (€7.3bn/US$82bn).
However, according to The Australian newspaper, Andrew McClelland QC, counsel for the country’s competition watchdog, denied Tabcorp claims in the Australian Competition Tribunal that the merger would be of significant public benefit, adding that cost savings set out were “inherently implausible” and “speculative”.
Read jour latest analysis on the Tabcorp-Tatts merger - competition, product offering and media rights (paywall)
McClelland added: “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.”
The ACCC also picked up on competition concerns that were raised earlier this year, although Tabcorp previously announced plans to sell its Odyssey gaming machine monitoring business to ease any worries.
“The competitive constraint Tabcorp and Tatts impose on each other will be lost with the proposed acquisition and will likely give Tabcorp the ability to increase yields,” McClelland said.
However, the recommendation from the ACCC is not binding and the Tribunal is expected to announce its own decision by June 13.
Appealing to the Tribunal on behalf of Tabcorp, Cameron Moore SC said the merger was the only way stand-alone, country-centric operators such as his client and Tatts would remain in business.
Moore added: “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.
“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.”