The $11 billion merger of Tabcorp and Tatts faces more delays after the competition regulator, the ACCC signalled it was going to challenge a ruling from the Australian Competition tribunal giving the deal the greenlight.
The merger was given the OK by the Tribunal after the decision by the ACC to reject the deal was challenged by the companies. The tribunal dismissed Commission concerns about the merged entity’s market power.
The ACCC said yesterday (https://www.accc.gov.au/media-release/accc-appeals-tribunal-decision-in-tabcorp-tatts-merger) it had applied to the Federal Court for a “judicial review” of the tribunal’s decision to approve the bid.
“The ACCC is alleging the Tribunal made three reviewable errors. It is therefore seeking clarification of these three points of law which are central to the Tribunal’s assessment of Tabcorp’s proposed acquisition of Tatts,” ACCC Chairman Rod Sims said in yesterday’s statement.
“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.”
The Commission’s challenge means that the two companies will have to wait to complete their merger. That didn’t worry the market yesterday and Tabcorp shares rose 1.4% to $4.29 and Tatts shares ended up 0.7% at $4.04.
In its claim, the ACCC claims the tribunal was wrong to think it had to be satisfied there would be a “substantial" lessening of competition before it could determine the merger would be detrimental.
Mr Sims said this was inconsistent with previous tribunal decisions, which had taken into account the detriment caused by "any" lessening of competition.
The application also says the tribunal failed to compare the likely future state of competition with and without the merger – a test the ACCC claims is "fundamental" in weighing the potential detriment the merger could cause.
And a third claim is that the tribunal placed too much emphasis on benefits such as cost savings, which would be favourable for Tabcorp but not consumers more broadly.
"We believe we had no option but to seek a review of these three, what we say, are reviewable errors, particularly because they set such important precedents for the decisions we have to make into the future," Mr Sims said. The ACCC said it was also seeking an order that the matter be dealt with on an expedited timetable.
Tabcorp told the ASX yesterday it was considering the ACCC’s application, and would “provide further information as appropriate".
