JWS Consulting is a division of Johnson Winter & Slattery providing commercial consulting services.
Johnson Winter & Slattery is engaged by major businesses, investment funds and government agencies as legal counsel on important transactions and disputes throughout Australia and surrounding regions.
Our firm provides a diverse range of opportunities for talented, enthusiastic people to develop brilliant legal careers.
Our news and media coverage including major transaction announcements, practitioner appointments and team expansions.
We support a number of community initiatives and not for profit organisations across Australia through pro bono legal work and charitable donations.
We support a number of organisations through sponsorships.
The Australian Competition Tribunal has given competition approval for the $11bn merger of Tabcorp and Tatts. The decision reinforces that:
Although the Tribunal was the first instance decision maker in this case, under proposed changes to the Competition and Consumer Act 2010 (Cth) (CCA) recommended by the Harper Review, the ACCC will become the first instance decision maker in merger authorisations in the future and empowered to authorise mergers on the basis that they either will not substantially lessen competition or will result in net public benefits. Parties will have a right of appeal to the Tribunal for a full merits review. These changes (discussed further below) are expected to come into effect in mid-2018.
If you have a proposed merger with public benefits:
If you want to challenge a merger:
On 13 March 2017, Tabcorp lodged an application with the Australian Competition Tribunal seeking approval for its merger with Tatts on the grounds that the proposed acquisition would result in substantial benefits to the public. Its application was supported by more than 30 witness statements, including 4 expert reports. It included evidence from several racing industry bodies which were supportive of the proposed merger or did not actively oppose it.
Prior to Tabcorp’s application to the Tribunal, Tabcorp applied to the ACCC for informal merger clearance. The ACCC conducted a review of the proposed acquisition to determine whether it was likely to substantially lessen competition in a market. The ACCC published a Statement of Issues on 9 March 2017 expressing a preliminary view that several issues raised competition concerns. Tabcorp’s application to the Tribunal four days later had the effect of bringing the informal clearance process to an end.
In support of Tabcorp’s application, Tatts sought and was granted leave to intervene in the proceeding. In addition, CrownBet, Racing Victoria and Racing.com were granted leave to intervene. In total, more than 70 witnesses and interested parties made statements in these proceedings. The Tribunal heard evidence and submissions for three weeks from barristers for the parties.
In a decision raising complex issues in a number of markets, the Tribunal ultimately was satisfied that the proposed merger is likely to result in substantial benefits to the public and that anticompetitive detriments identified by the ACCC and the interveners were unlikely to either arise or be of significance.
The Tribunal found that the merger would result in substantial public benefits in the form of cost synergies/savings and revenue benefits associated with improved efficiencies. Without deciding if it was the case, the Tribunal noted that it may be appropriate to weigh some part of the revenue increases more highly if they flow to industry than if they were retained by shareholders of the merged entity.
The Tribunal found that there would be no substantial lessening of competition in any market:
For completeness, no competition concerns arose in the gaming services industry as Tabcorp applied for formal authorisation offering, as a condition of authorisation, an undertaking pursuant to s 87B of the CCA to divest its Odyssey business, which dealt with any competition concerns in the relevant markets.
Overall, the decision indicates that the Tribunal had a greater readiness (relative to the ACCC) to take a longer term view of market outcomes when assessing anticompetitive detriments. In the decision, the merger parties’ evidence that they were ailing, flailing or under effective attack by new entrants and/or changed market circumstances appeared to be decisive in the Tribunal reaching its view that there would be no anticompetitive detriments in any market.
The decision continues the trend of the Tribunal/Courts taking an opposing view to the ACCC in forecasting potential anti-competitive detriments of a proposed merger. In each of the three Tribunal determinations since the process for direct application to the Tribunal was introduced in 2007, the Tribunal has been satisfied that there would be no substantial lessening of competition in anymarket despite the ACCC either announcing that it was opposing the deal due to competition concerns or expressing a view that there may be or may be likely to be competition concerns. This is consistent with earlier judicial decisions such as the Tribunal’s decision to overturn the ACCC’s refusal to grant Qantas and Air New Zealand authorisation in respect of Trans-Tasman agreements1 and the Full Federal Court’s Metcash decision, which overturned the ACCC’s findings that Metcash’s proposed acquisition of Franklins would substantially lessen competition.2
Under proposed changes to the Competition and Consumer Act 2010 (Cth) (CCA) recommended by the Harper Review, the ACCC will be the first instance decision maker in merger authorisations in the future. Currently, parties wishing to have a merger reviewed have three options: the ACCC’s informal merger clearance process (which is non-statutory process based on a substantial lessening of competition (SLC) test and used in the vast majority of merger clearances), the formal merger clearance process (which is also based on an SLC test and has never been used) or merger authorisation by the Australian Competition Tribunal with a public benefit test.
From mid-2018, if the Government’s Competition and Consumer Amendment (Competition Policy Review) Bill 2017 becomes law, the ACCC will be the decision maker at first instance under a single formal process (combining the latter two options above) and empowered to authorise a merger on the basis of an SLC test or a net public benefits test. The ACCC’s decision will be subject to full merits review by the Tribunal.
JWS acted for Racing.com in its opposition to the merger.
1 Qantas Airways Limited  ACompT 9
2 ACCC v Metcash Trading Limited  FCAFC 151
This piece is designed to prompt thoughts of what changes may be required in private M&A documents in order to accommodate and allocate risks relating to COVID-19 and the fallout from this pandemic.
ASIC and ASX have both announced temporary changes to their respective regulatory regimes to facilitate capital raisings for listed entities in response to the economic impact of COVID-19.
Times are changing rapidly with the current flow of Coronavirus measures introduced to support businesses in debt and distress.