With the ink still wet on the Tribunal’s report, the ACCC has announced an appeal on key factors in the decision to allow Tabcorp to proceed with its $11bn merger acquisition of Tatts Group.
November last year, Tabcorp sought informal clearance for its acquisition of Tatts through the ACCC (Australian Competition & Consumer Commission). When the ACCC released its paper seeking views on potential issues around competition, Tabcorp withdrew its application and lodged an application for authorisation with the Australian Competition Tribunal.
The Tribunal made its decision on the proposed merger of Australia’s largest gaming companies, publishing its findings in late June.
The ACCC was required to assist through reporting, evidence and examining witnesses, plus a submission on relevant issues. While it maintains that at the start of the Tribunal process it still had not formed a particular view, this was not the final result.
“It was only in our closing submissions, after assessing all the evidence, that the ACCC put the view that the public benefits claimed were not likely to clearly outweigh the public detriments to justify the grant of an authorisation,” said ACCC Chairman Rod Sims.
The Tribunal subsequently ruled in favour of allowing the merger anyway.
Today, the ACCC has announced it has applied to the Federal Court for judicial review of the decision, suggesting the ruling body made three reviewable errors it believes are “central to the Tribunal’s assessment” and thus it seeks clarification.
“We are seeking judicial review because we believe these legal principles are fundamental not only to the Tabcorp decision, but to all future merger and non-merger authorisation assessments,” said Sims.
The basis of the grounds for review are:
- That ‘detriment’ was only considered if seen to be “substantial” – the ACCC believes this inconsistent with previous decisions and that the Tribunal should take into account any lessening of competition
- The ACCC wishes to review the Tribunal’s lack of consideration of the future state of competition – both with and without the merger
- The ACCC sees there was an error in the weight given to benefits such as cost-savings and revenue synergies, arguing they were to the benefit of Tabcorp and not consumers broadly
One of the perceived benefits is the synergies that can be achieved by the merger and the spectre of achieving a single pool. Inherently, this must result in some punters receiving a lower dividend than is currently the case. It also removes choice from the market place. By it’s very nature, that also impacts products offered by other players in the industry.
As such, there is no doubt the merger can create a less competitive market.