Tabcorp's $11 billion bid for rival gambling outfit Tatts has hit an unforeseen courtroom hurdle put in place by the takeovers handicapper, the Australian Competition and Consumer Commission.
Tabcorp had expected to be well into the home straight with the takeover before the start of Spring Carnival, but now finds itself back it the starting gate, chaffing at the bit, as the ACCC recorded a surprise victory in the Federal Court.
Tabcorp planned to sidestep the ACCC — which had publicly questioned the benefits of the merger — by seeking and winning approval from the Australian Competition Tribunal.
That move riled the ACCC's competitive instincts and it hauled Tabcorp into court seeking to have the ACT approval set aside.
The Federal Court backed Tabcorp's argument to a degree and called for more submissions to be made by all parties before another hearing on Thursday September 28.
James Packer's relatively new entrant in the field, CrownBet, had also jumped aboard the ACCC appeal, arguing the deal was bad for punters and the public interest.
"The ACCC is pleased that the Full Federal Court has set aside the decision, however the reasons for the decision are not yet public," ACCC Chairman Rod Sims said.
Tribunal decision didn't consider punters: ACCC
The ACCC's appeal centred on what it argued was the faulty reasoning of the ACT such as the merger would not cause a substantial lessening of competition.
"The Tribunal [also] made an error when it failed to compare the likely future state of competition both with and without the proposed acquisition in order to assess competitive detriment," Mr Sims said.
"Finally, 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."
The initial decision from the ACT placed only one condition on the sale — requiring Tabcorp to sell its pokies monitoring Odyssey business in Queensland.
If the merger is ultimately waived through, the new enterprise will control about 90 per cent of Australia's totaliser betting and will generate revenues in excess of $5 billion.
Tabcorp forecast the deal would release about $130 million a year in synergies by eliminating overlapping IT platforms, merging head offices and cutting jobs.