ACCC to further examine Tabcorp Tatts merger

Wednesday 8th of March 2017

Australia’s competition regulator says it will examine the proposed merger between wagering giants Tabcorp and Tatts Group “in greater detail”, according to a media release on Thursday.

“The ACCC (Australian Competition & Consumer Commission) has consulted extensively with industry participants within the racing, wagering, and gaming industries. The matter raises complex competition issues in a range of different areas, and industry participants have provided many differing views, al lof which we will need to examine in greater detail,” ACCC chairman Rod Sims.

In October last year, Tabcorp Holdings and Tatts Group agreed to a A$11.3 billion ($8.7 billion) merger, which is expected to take approximately two years to complete.

In November, market analysts predicted that the two operators may be forced to sell some of their non-wagering businesses under terms imposed by the ACCC.

The market experts, quoted by The Australian, noted that the ACCC denied the partnership nearly a decade ago on the grounds of unfair competition.

“The ACCC’s preliminary view is that the proposed merger is likely to substantially lessen competition in the supply of monitoring and other services to pokies venues in Queensland,” said Sims in the recent release.

The ACCC says, given these concerns, Tabcorp has provided the regulator with a divestment proposal to sell its Queensland electronic gaming machine monitoring business, Oddessy.

“Another consideration is whether the combination of Sky Racing and Tatts is likely to materially increase the market power currently held by Tabcorp in its dealings with licensed venues and racing media rights holders,” Sims said.

Tabcorp is the owner of Sky Racing, a dominant broadcaster of media content, says the ACCC. “The proposed merger will result in the combination of Sky Racing and Tatts’ retail wagering operations in Queensland, South Australia, Tasmania and the Northern Territory.”

However, the ACCC notes there is limited competitive overlap between retail wagering operations, which are held in separate states and territories.

Regarding competition in the online space, ACCC said: “It is our view that strong competition between online corporate bookmakers will mean recreational customers will continue to have choice about where to place their bets,” said Sims.

Other focuses of the ACCC investigation will be whether the proposed merger will affect the ability of competing wagering providers to obtain key inputs including pooling arrangements and access to racing vision, and whether or not they will be in a position to competitively bid for wagering licenses in the future.

There are other issues in relation to gaming services provided to pokies venues under consideration, including the competitive effect of the merged Tabcorp-Tatts potentially accessing commercially sensitive data of pokies venues as a monitoring provider and the overlap in the supply of repair and maintenance for pokies machine in Victoria.

The ACCC’s final decision will be announced on May 4, 2017, said the ACCC.

Bricks & Mortar Investigation Competition Merger