Will The Tabcorp – Tatts Merger Be Bad For Competition

Merging two companies used to be simple back in the days before
regulators began subjecting mergers to intensive scrutiny under the
guise of keeping competition alive.

Nowadays, merging two companies is considerably more difficult and
the case of the proposed merger between Tabcorp and Tatts Group
supplies an example of just how convoluted the merger process can
become.

The primary hurdle faced by Tabcorp and Tatts was proving that the
combined company would not hurt competition. The wagering industry
in Australia is one of the most competitive business environments in
the world. The wagering public has so many choices that it is almost a
clear case of excessive choice leading to a general sense of
procrastination, as differentiating between bookmakers free bets can
seem insurmountable in terms of making an objective decision.

In order to show that combining Tabcorp and Tatts would not give an
unfair advantage to the new entity, the merger needed to pass the
regulatory muster of the Australian Competition Tribunal (ACT).

This step came after all the interested parties bid on the proposal and
an equitable price was arrived at.

The ACT granted approval to the deal in late June of 2017, which would
tend to make one think, “Okay, then. Done Deal.”

Not so fast.

When the ACT officialy granted its blessing to the merger on 22 June
2017, a new player got into the act. The Australian Competition and
Consumer Commission (ACCC) made application with the Federal Court
for a review of the decision by the ACT.

The ACT made the determination that the merger would supply
benefits of a substantial nature to the public without any, or very little
detriment.

Now we find ourselves in the waning days of July with no clear
indication of whether the merger will go through.

The most recent wrinkle happened on 13 July, when CrownBet Pty Ltd
(CrownBet) filed an application of their own seeking judicial review of
the ACT finding that the merger passed muster. Tabcorp immediately
responded that it would oppose the CrownBet application and would
pursue an expedited hearing to resolve the matter.

The entire affair seems designed to make the eyes glaze over, however,
more than a few lawyers are raking in billable hours as all the
concerned sides work on ways to block the merger, or to make it go
ahead.

In order to provide some context, it is necessary to realise that the
merger was first proposed/announced in October of 2016. The
documentation of the proposal was written in the finest opaque
lawyer-ese and we would not compel anyone to read it.

Would the meger, if completed, put the combined entity in the postion
of a monopoly?

Tatts is active in wagering, lotteties and the gaming industry
everywhere in Australia except Western Australia and New Zealand as
well.

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