The Australian Competition and Consumer Commission (ACCC) has applied to the Federal Court for a judicial review of the Australian Competition Tribunal’s decision to approve Tabcorp’s AU$11 billion acquisition of Tatts Group.
In a Monday statement, the ACCC cited “three reviewable errors” in the Tribunal’s finding that the proposed acquisition would result in substantial public benefits and no material detriment.
“The ACCC is alleging the Tribunal made three reviewable errors. It is therefore seeking clarification of these three points of law which are central to the Tribunal’s assessment of Tabcorp’s proposed acquisition of Tatts,” said ACCC Chairman Rod Sims.
“We are seeking judicial review because we believe these legal principles are fundamental not only to the Tabcorp decision but to all future merger and non-merger authorization assessments.”
The ACCC believes the Tribunal erred by failing to take into account all possible instances of competition being lessened by the acquisition and by failing to compare the likely future state of competition both with and without the proposed acquisition in its consideration of whether the proposed acquisition was likely to result in any detriment.
It is also seeking review on the grounds that the Tribunal made an error in the weight it gave to benefits, such as cost savings and revenue synergies, which would be retained by Tabcorp and not shared with consumers more broadly.
In its announcement, the ACCC stated that, “Section 50 of the Competition and Consumer Act 2010 prohibits acquisitions that would have, or would be likely to have, the effect of substantially lessening competition.
“This is the test the ACCC applies when it is assessing a merger for informal clearance, but this test is significantly different to the test applied by the Tribunal for authorization of a merger.
“Under Section 95AT of the Act, the Tribunal may authorize an acquisition where it is satisfied that a proposed acquisition would result, or be likely to result, in such a benefit to the public (that is, that public benefits outweigh public detriments) that the acquisition should be allowed to occur.”
Tabcorp first applied for acquisition approval with the ACCC last November but withdrew its application in March to lodge an application with the Australian Competition Tribunal instead. The acquisition was subsequently approved on 22 June.
The ACCC said it was seeking an order that the judicial review to take place on an expedited timetable.
Tabcorp said it “is presently considering the application and will provide further information as appropriate.”
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