The Australian Competition and Consumer Commission will oppose the proposed acquisition of UNiTAB by Tabcorp, ACCC Chairman, Mr Graeme Samuel, said today.
The ACCC considers that the proposed acquisition is likely to substantially lessen competition in a number of markets related to wagering in Australia and therefore would breach section 50 of the Trade Practices Act 1974.
Tabcorp is the largest wagering operator in Australia, currently holding exclusive totalisator (that is, pari-mutuel) wagering licences in Victoria and New South Wales. UNiTAB is the second-largest wagering operator in Australia, currently holding exclusive totalisator licences in Queensland, South Australia and the Northern Territory.
If the proposed acquisition were to proceed, Tabcorp would control all the major totalisator pools in Australia. The ACCC's key competition concerns resulting from the proposed acquisition include, but are not limited to, the following:
- competition for future wagering licences, and therefore competition in wagering markets, would be substantially lessened. Tabcorp's current pari-mutuel wagering licence in Victoria expires in 2012. Furthermore, the exclusive licence arrangements currently in place in NSW expire in 2013, potentially opening that market for competitive licence applications. The ACCC considers that, if the merger does not proceed, Tabcorp and UNiTAB are likely to be competitive applicants for the licences.
- the proposed acquisition would substantially lessen competition in the national market for the supply of the right for TABs to combine their totalisator pools. Currently, the TABs in Western Australia, Tasmania and the ACT combine their pools with Tabcorp's Victorian totalisator pool, so as to reduce potential volatility in odds, which can occur when large bets are made. The three TABs pay Tabcorp fees for this right. The proposed acquisition would remove UNiTAB as the only alternative supplier of these pooling services in Australia. This would also have significant consequences for potential new entrants to wagering markets.
Tabcorp offered a section 87B undertaking* to address competition concerns arising from the proposed acquisition, with particular reference to pooling services. However, the competition concern is structural – that is, the number of suppliers of pooling services would fall from two to one. In contrast, the proposed undertaking is behavioural – that is, Tabcorp has offered to take certain commercial actions that it believes would remedy the ACCC’s concerns.
The ACCC does not consider that behavioural undertakings, by themselves, can satisfactorily resolve structural competition concerns, although in some cases they may be valuable adjuncts to structural undertakings (that is, undertakings to divest part or all of a business to remedy competition concerns).
The ACCC has serious concerns about the practical operation of the undertaking offered by Tabcorp and is not satisfied that the undertaking resolves its competition concerns.
The ACCC will be publishing a Public Competition Assessment in due course, which will be available on the ACCC website.