ACCC not To oppose Merger between Tabcorp Holdings Limited and TAB Limited or the proposed merger between UniTab and Tab Limited

The Australian Competition and Consumer Commission will not oppose the proposed merger of TABCORP Holdings Limited and TAB Limited or the proposed merger of UNiTAB Limited and TAB Limited, ACCC Chairman, Mr Graeme Samuel, said today.

The ACCC considered whether the proposed mergers would lead to a substantial lessening of competition in gambling in Australia, in contravention of section 50 of the Trade Practices Act 1974.  Section 50 prohibits mergers and acquisitions that will have the effect, or are likely to have the effect, of substantially lessening competition in a market.

"The ACCC did not believe that the proposed mergers would substantially lessen competition in the relevant markets", Mr Samuel said.

The proposed merger of TABCORP and TAB Limited will merge the Victorian exclusive state wagering licence holder and gaming and hospitality business with the New South Wales exclusive state wagering licence holder and owner and operator of the Sky Channel.  The proposed merger of UNiTAB and TAB Limited will merge the Queensland exclusive state wagering licence holder and operator of a radio station and gaming services with the aforementioned NSW business.

There is an extensive gambling regulatory regime in Australia which is subject to review under National Competition Policy.  In August 2003 the National Competition Council concluded that exclusive state wagering licences issued by the State Governments were not a necessary part of the industry.  However, NCC conceded that the cost of compensating the state TABs for revoking their exclusive licences (prior to their expiration date) would be not be feasible. Therefore, the exclusive state wagering licences are set to remain in operation until at least 2012.

Extensive market inquiries were conducted with a range of industry participants. The ACCC found that the provision of exclusive state wagering licences during privatisation of the industry has resulted in the formation of what are essentially state based monopolies with a significant level of regulation.  As a result, there is limited cross border competition between the TABs and their pricing and day to day operations have been controlled.

Either of these proposed transactions will deliver to the merged entity control of the Sky Channel, the monopoly provider of satellite racing television services.

Some industry participants expressed concern in relation to Sky Channel, however the ACCC concluded that this aspect of the proposed transactions did not raise competition concerns.

In coming to this conclusion, the ACCC examined the way Sky Channel operated under current circumstances, and concluded that there were no opportunities.