Tabcorp merger with Tatts sent back to Australian Competition Tribunal

Tabcorp will know within a week the outcome of a new competition hearing into its proposed $11bn tie-up with Tatts..

Tabcorp CEO David Attenborough with racehorse Extra Zero, Flemington. Pic: David Geraghty

Tabcorp will know within a week the outcome of a fresh Australian Competition Tribunal hearing into its proposed $11 billion merger with Tatts Group.

It comes after the ACT’s Justice John Middleton told the parties this afternoon that he was keen to fast-track his ruling in the case.

The proposed merger has been sent back to the competition tribunal after the Federal Court today upheld an Australian Competition and Consumer Commission appeal against the ACT’s approval process.

In a letter to all the parties, including the competition regulator, Justice Middleton said he wanted the matter considered and determined “as soon as practically possible’’.

“The tribunal is tentatively of the view that it may be possible that any further consideration can be dealt with on the papers without an oral hearing. The lawyers for the parties and participants are fully aware of the issues involved and the factual matrix already determined by the tribunal,’’ he wrote in the letter.

He asked the parties to provide written submissions by next Monday, with any reply by the close of business Tuesday.

“The tribunal would then further consider and determine the matter. If the issues in contention are of small compass, the tribunal would endeavour to make a new determination by September 28 after considering the submissions of the parties and the participants.’’

This would mean the competition tribunal decision would be handed down ahead of the meeting of Tatts shareholders to vote on the deal on October 18.

The gaming merger was thrown into doubt earlier this afternoon with a ruling by the Federal Court, upholding an appeal against the deal progressing.

The court ordered the merger be sent back to the competition tribunal.

The reasons for the judgment were embargoed for the next five days.

Today’s ruling came almost a year after the transaction was first proposed, and after Tabcorp and Tatts took the unusual step of bypassing the ACCC and seeking approval directly from the Australian Competition Tribunal.

ACCC chairman Rod Sims said he was “pleased’’ with the decision but was awaiting the details of the judgment.

“The ACCC argued that the tribunal had made an error in failing to assign less weight to benefits which would be retained by Tabcorp, its shareholders and the racing industry, and not shared with consumers more broadly,” Mr Sims said.

The James Packer-backed Crownbet, which joined the ACCC in appealing the ACT decision, also welcomed the Federal Court ruling.

“I look forward to it going back to the competition tribunal and would be hoping for different outcome when it hears the case again,’’ said Crownbet chief executive Matt Trip.

Despite fierce objections from corporate bookies including CrownBet, the merger deal was approved by the competition tribunal in June.

However, both the Australian Competition and Consumer Commission and CrownBet asked the Full Federal Court to review the decision.

The ACCC’s appeal was based on chairman Rod Sims’ belief three points of law, which it relies internally on to make its own authorisation decisions, needed to be clarified following the competition tribunal’s ruling.

Today Mr Sims said: “We are clearly very pleased that the court has upheld our appeal. We need to see the detail to know the extent of that.

“These were important points of principle that had to be challenged.’’

Last month, Mr Sims said the ACCC accepted it needed to do more to convince courts and tribunals of its point of view — including gather more evidence, potentially blowing out merger timelines.

CrownBet supported the ACCC’s position and claimed the proposed merger would be bad for punters and competition.

Shares in both Tabcorp and Tatts group were halted from trade ahead of the court’s ruling today, at $4.29 and $4.07 respectively.