TAB punt pays off
IT’S just silly to characterise the Australian Competition Tribunal’s – entirely sensible – approval of the Tabcorp- Tatts merger as some sort of embarrassment or black eye for either the ACCC broadly or its boss Rod Sims specifically.
It has zero significance for the ACCC either operationally or strategically – in either of the two main streams it works at and are captured in its spelt- out name: promoting competition and looking after consumers.
Yes, it might well be an $ 11 billion merger, but it’s not some sort of iconic or landmark “competition decision” which fundamentally changes the way the competition rules are thought of and the way they operate, to the major detriment of the ACCC as the regulator.
It was not a smack- down of the ACCC or even an overturning of one of its decisions on appeal. Indeed we could very well have ended up at exactly, or very close to, the same destination if Tabcorp and Tatts had stuck with the ACCC process instead of heading straight to the ACT.
If there is a loser, it is Racing Victoria, which opposed the merger. But it doesn’t need to be; indeed, if it is collectively smart, it would seize the opportunity to build the merger approval into a win- win outcome.
That would be, for racing specifically in Victoria, but also broadly across the two main centres of Melbourne and Sydney, and indeed nationally.
First the ACCC. When it was looking at the merger proposal it had to assess whether it would lead to a substantial lessening of competition.
It, of course, never reached a conclusion because Tabcorp headed off to the ACT, but the ACCC’s initial “statement of issues” very strongly indicated that apart from some subsidiary matters it would not have reached that conclusion about the core merger issue.
In its role before the ACT – where Tabcorp and TAB were seeking “authorisation” of a merger that they were implicitly admitting WAS anticompetitive – the “competition hurdle”, so far as the ACCC was concerned, fell dramatically.
It had to advise whether there would be any reduction of competition – that’s self- evidently the case in putting all the state- based TAB pools together into a national monopoly.
And then the ACCC had to identify “benefits” that might flow from the merger – like lower costs, better service etc – and give its opinion on whether they would offset the reduction in competition.
It indicated it believed those benefits were inadequate; the ACT disagreed.
So we had the rather odd situation that while the ACCC would probably have ticked the merger as not being ( sufficiently) anti- competitive. It would not have authorised it because it wasn’t going to generate enough benefits to offset the ( relatively minor) reduction in competition.
But that’s not an ACCC blunder or some embarrassment on its part; it’s the consequence of the difference between the two processes. And, not exactly incidentally, what was the basis of the punt, the bloody great $ 11 billion punt, that Tabcorp and Tatts took. And won.
Now that we are finally – and sensibly – going to have a national TAB, albeit in a 21st century context of ever- increasing online competition from corporate bookies that we didn’t have in the “good old days” of statebased TABs, it’s time for Racing Victoria to come back into the TabcorpSky tent.
That’s on the ( I would suggest, pretty reasonable) assumption that Macquarie and its team of mainchancers won’t be able to come back into the game. Given their “need” to pluck super- profits, I don’t see how they could package a sufficiently attractive alternative to the merger for Tatts holders.
Now, going back to what should now be the main game; frankly, broadcasting of the racing product is a mess. The mess starts with RV’s decision to have its own dedicated racing channel, but has bled into the way the Tabcorp- owned Sky broadcasts not just racing but trots and dogs as well. And broadcasts not just the domestic product, but international as well.
When RV went out on its own some years ago, its move was justified and arguably even necessary. The detail is buried in time, but essentially Tabcorp/ Sky were seeking to screw Victorian racing and more broadly screwing up their overall telecast.
What we – that’s short word for “everyone” – need is a unified telecast built around a premium channel, solely devoted to Melbourne and Sydney racing, with appropriate diversions to at least Brisbane and perhaps also Perth and Adelaide for their carnivals.
Then you would rationalise – and improve – coverage of all the rest of racing plus the trots and dogs on, say, two channels ( which would include abbreviated coverage of the Melbourne and Sydney races).
Australian racing broadly is a global premium product, in which we actually have a comparative advantage. Sydney and especially Melbourne is crème de la crème.
Putting the racing together with top- quality broadcasting off a national pool just has to be a huge win- winwin, for the industry, the punters and state governments. It would also have very clear spin- off benefits to the other two codes and indeed, even to competing online bookies.
We ended up at the right destination with the merger approval. Now it is up to all the parties to “get smart” and reap the potentially much bigger benefits.