Tabcorp seeks certainty in Tatts timings

Tabcorp seeks certainty in Tatts timings

Monday, March 13, 2017 Posted by Scott Longley
Direct approach to competition tribunal avoids delays

Tabcorp has surprised Australian business commentators by filing a direct application with the Australian Competition Tribunal (ACT) to review and processes its planned A$11bn merger with Tatts Group. 

The move will see the ASX-listed gambling operator request for a decision by the Australia Competition and Consumer Commission (ACCC) to be bypassed in order to gain greater clarity over the timings of the decision. The company will now know its fate in three months.

Updating investors, Tabcorp detailed that having gained shareholder and wider stakeholder merger approval it believes the ACT will act as a better regulatory supervisor as the tribunal takes into account the overall public benefits of the merger, unlike ACCC processes. 

“This differs from the test the ACCC applies, which is limited to assessing whether a proposed acquisition is likely to substantially lessen competition, and is not able to take into account countervailing public benefits. The merger authorisation will likely deliver greater Transaction certainty compared to the informal clearance process by requiring the consideration of public benefits. Importantly, the merger authorisation application is considered within a statutory timetable,” detailed Tabcorp in its corporate statement.

Australian business news sources have been surprised by Tabcorp governance’s decision to switch regulatory body, midway through its ongoing merger review.  

Industry commentators have detailed that perhaps an under pressure Tabcorp governance did not feel confident of satisfying ACCC competition provisions regarding its merger. 

In its first merger report the ACCC had asked Tabcorp and Tatts to restructure its gaming machine assets which had "significantly weakened gaming machine monitoring" in the state of Queensland.

The ACCC is reported to have competition concerns regarding the high penetration of joint Tabcorp-Tatts gambling services in smaller Australian states, however it is understood that ACCC officials believe that the combination would would have no impact on the ‘wider Australian gambling market. 

Updating investors on his firm’s decision, David Attenborough, Tabcorp chief executive stated: “Through our extensive discussions with stakeholders since announcement of the Transaction, it has become increasingly clear that there is broad-based support among our stakeholders for the proposed combination with Tatts. After careful consideration of the statement of issues, Tabcorp believes the merger authorisation process will deliver greater transaction certainty. It enables public benefits, including our strong funding relationship with the racing industry, to be taken into account.”

Totally Gaming says: Having entered initial merger talks last October with a view to forming Australia’s outright leading gambling operator, Tabcorp investors have had little to cheer. Tabcorp has come under severe pressure following a lacklustre 2016 results and having been fined a record A$45 million (£28 million) fine. The company states that all of its focus is being dedicated towards completing the merger in 2017.

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