Plans for an $11 billion mega-merger of the nation’s two biggest gambling companies have been dealt a devastating blow, with the Federal Court quashing the approval of the ambitious proposal.
The tie-up of the ASX-listed Tabcorp and Tatts Group was thrown into uncertainty on Wednesday when the court found in favour of legal arguments filed by the competition watchdog about why the deal’s approval should be set aside.
“The court orders that the decision of the tribunal be set aside,” Justice Nye Perram said, “and the matter be referred back to the [Australian Competition Tribunal] for consideration.”
Justice Perram ruled that the reasons for the decision would not be made public for at least five days.
It comes after Tabcorp and Tatts earlier this year took the unusual step of bypassing the Australian Competition and Consumer Commission’s (ACCC) approval process and instead making their case for a merger directly to the Australian Competition Tribunal.
The tribunal granted approval with a single minor condition, and dismissed a litany of concerns raised by the ACCC and other wagering operators about the immense market power that the merged Tabcorp-Tatts behemoth would command.
The ACCC then applied for the Federal Court to undertake a “judicial review” of the approval, alleging the competition tribunal made “reviewable errors” in its assessment of the detriments the merger would cause.
rownBet also launched an application, saying the decision to approve the proposal had been “irrational”, and claiming it was “bad for punters and competition”.
The Tabcorp-Tatts merger has been under a could ever since the two appeals were lodged in July, but Tabcorp has consistently told shareholders it was “committed to the transaction” and confident of delivering the deal.
Scheme booklets have already been sent to Tatts shareholders, and a vote on the proposed merger was scheduled to run on October 18.