In Australia, the national competition regulator has expressed concerns about Tabcorp Holdings Limited’s proposed $4.44 billion plan to buy rival Tatts Group due to the effect the proposed merger could have on the country’s wagering, racing media and gaming industries.

The nation’s largest bookmaker, Melbourne-based Tabcorp Holdings Limited has a reported market capitalization of around $3 billion and operates Australia-facing brands including Sky Racing and Tab.com while having experience in the United Kingdom thanks to a partnership with The Sun newspaper. It has been holding negotiations regarding the purchase of Brisbane-based Tatts Group since November of 2015 and revealed in October that the union, which would create the biggest gambling company in Australia and provide stiff competition to established operators such as Ladbrokes, William Hill, Unibet and Bet365, could be completed by the summer subject to the receipt of necessary regulatory approvals including those from the Australian Competition And Consumer Commission.

However, Rod Sims, Chairman for the Australian Competition And Consumer Commission, has declared ahead of his body’s planned May 4 decision on the planned merger that the amalgamation 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”.

“The Australian Competition And Consumer Commission’s preliminary view is that the proposed merger is likely to substantially lessen competition in the supply of monitoring and other services to pokies venues in Queensland,” said Sims.

In the face of these concerns, Tabcorp Holdings Limited recently provided the regulator with a divestment proposal that would see it offload its Queensland electronic gaming machine monitoring business, Odyssey, which the Australian Competition And Consumer Commission has put out for comment with a deadline of March 24.

Sims explained that the Australian Competition And Consumer Commission is moreover concerned about the merger because Sky Racing is the nation’s dominant broadcaster of racing media content and the deal “is likely to materially increase the market power currently held by Tabcorp [Holdings Limited] in its dealings with licensed venues and racing media rights holders”.

Although the proposed merger would result in the combination of the firms’ bricks-and-mortar wagering operations in South Australia, Queensland, Tasmania and the Northern Territory, the Australian Competition And Consumer Commission has noted that there is little competitive overlap as the pair currently primarily compete for online and telephone customers.

“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,” said Sims.

Sims stated that the Australian Competition And Consumer Commission is additionally concerned about how the proposed merger would affect the ability of competing wagering providers to obtain key inputs such as pooling arrangements and access to racing vision and whether or not these would be in a position to competitively bid for wagering licenses in the future.

Finally, Sims pronounced that the regulator will also be investigating other issues ahead of finalizing its May decision including the competitive effect of the merged entity potentially using its monitoring services to access the commercially sensitive data of venues and what the deal could mean for the provision of slot repair and maintenance services in the state of Victoria.

Tabcorp Holdings Limited’s plan to buy Tatts Group comes under scrutiny was last modified: June 13th, 2017 by Adam Morgan