Australia’s competition watchdog the ACCC has given the green light to two small mergers in gaming and travel.
The Commission yesterday removed the last doubts over the $703 million bid from global travel booking giant Expedia for Wotif.com (WTF).
And it also said it was greenlighting the purchase of the ACT TAB by Tabcorp (TAH) in a $105.5 million deal.
The greenlight for the Expedia buy sent Wotif shares up 6.8% to $3.30 on the ASX yesterday, while Tabcorp shares could only manage a half a cent riose to $3.645.
The Commission said it would not oppose the Wotif acquisition, despite opposition from hotels who claim the move will push up fees.
“The ACCC noted the concerns raised by market participants that Wotif represented an important source of bookings for some accommodation providers and that its removal from the Australian market may result in them paying higher commission rates to online travel agents (OTAs),” ACCC Chairman Rod Sims said in yesterday’s statement.
“However, the ACCC found that there has been considerable change in the competitive dynamics of the online accommodation distribution market in recent years. This has included new entry by a number of competitors and business models, including Booking.com, which has grown quickly to become the largest OTA in Australia,” Mr Sims said.
The ACCC also noted the increasing importance of metasearch sites such as TripAdvisor and Google Hotels Finder, which aggregate the offers of hotels and numerous OTAs in one place for consumers to choose from. TripAdvisor is consistently one of the top two travel-related websites visited by consumers in Australia.
“Metasearch websites increasingly facilitate hotels’ ability to promote themselves alongside OTAs, and transact directly with consumers,” Mr Sims said.
“The ACCC considered that the acquisition was unlikely to diminish the dynamic nature of the industry. Disruptive developments from smaller OTAs and from companies in related online sectors, such as the metasearch providers, can be expected to constrain Expedia in the future."
And the Tabcorp purchase of the ACT’s TAB wagering business will now proceed after the Commission’s approval yesterday.
The deal was originally announced in July.
As part of the deal, the ACT government will issue Tabcorp with a totaliser and sports bookmaking licence, while the company will pay an annual $1 million licence fee. ACTTAB runs the territory’s wagering, Keno and trackside businesses.
The Commission said its public review focused on whether, as a result of the proposed acquisition, Tabcorp would be able to offer punters less favourable odds, increase its commission fees or otherwise degrade the quality of its wagering products. The Commission also considered whether there would be any impact on the supply of ‘pooling services’.
“The ACCC considered that ACTTAB has not been a vigorous competitor in wagering markets and the proposed acquisition would only result in a marginal increase in market concentration,” ACCC Commissioner Dr Jill Walker said in a statement yesterday.
"While Tabcorp and ACTTAB both offer pari-mutuel and fixed odds wagering products to punters nationally via the telephone and internet, there is limited direct competitive overlap in their local retail outlets. They each have exclusive licences to supply off-course wagering services in their respective ‘home’ states – ACTTAB in the ACT, and Tabcorp in Victoria and NSW.
“The ACCC determined that Tabcorp would continue to be competitively constrained by the corporate bookmakers and other state-based operators.
"Additionally, the ACCC considers the proposed acquisition will not have a material impact on the national supply of pooling services in Australia,” Dr Walked concluded.
