Consumer watchdog the ACCC (Australian Competition and Consumer Commission) has identified a range of competition issues with the proposed Tatts and Tabcorp gaming business merger.
Tabcorp and Tatts agreed in October to create a diversified gambling entertainment group and ASX 50 company combining TAB betting, lotteries, Keno and gaming services, with an enterprise value of $11.3 billion and a market capitalisation of $8.6 billion.
Tatts has rebuffed a takeover bid by a Macquarie Bank-backed consortium, preferring instead to merge with Tabcorp.
Today the ACCC issued its first assessment of the deal, identifying areas with potential problems mainly in the gaming services and racing broadcast areas.
“The matter raises complex competition issues in a range of different areas, and industry participants have provided many differing views, all of which we will need to examine in greater detail,” says ACCC chairman Rod Sims.
The proposed merger is likely to substantially lessen competition in the supply of monitoring and other services to pokies venues in Queensland, according to the ACCC’s preliminary findings.
However, Tabcorp has provided the ACCC with a divestment proposal to sell its Queensland electronic gaming machine monitoring business, Odyssey.
The ACCC says there is also an issue with gaming services provided to pokies venues, including the competitive effect of a merged Tabcorp-Tatts accessing commercially sensitive data at pokies venues.
Sims says another consideration is whether the combination of Sky Racing and Tatts is likely to
increase the market power of Tabcorp in its dealings with licensed venues and racing media rights holders
Tabcorp is the owner of Sky Racing, the dominant broadcaster of racing media content.
The proposed merger will result in the combination of Sky Racing and Tatts’ retail wagering operations in Queensland, South Australia, Tasmania, and the Northern Territory.
The ACCC says there is limited competitive overlap between bricks and mortar wagering operations of the merger parties which are exclusively held in separate states and territories.
“It is our view that strong competition between online corporate bookmakers will mean recreational customers will continue to have choice about where to place their bets,” says Sims.
The ACCC seeking further submissions by March 24. A final decision is expected in May.