The reasons for judgment have been released in the Tabcorp/Tatts judicial review matter – sooner than expected.
Of the ACCC’s three grounds of judicial review only the first succeeded; the Court held that the Tribunal erred in not assessing certain detriment alleged by the ACCC.
The ACCC’s Grounds of Appeal
The ACCC’s three grounds of appeal were that:
- that the Tribunal was wrong to reason that it could only conclude the acquisition would result in a detriment if it found there was a substantial lessening of competition;
- that the Tribunal wrongly failed to compare the likely future state of competition with and without the proposed acquisition
- that the Tribunal erred in the weight it gave to private benefits relative to benefits that would flow to consumers
Ground 1: Assessment of detriment
On the claim that the Tribunal had failed to consider detriments short of ‘substantial lessening of competition’, the Court stated:
 … a mandatory consideration in the Tribunal’s assessment of an acquisition will include any non-trivial competitive detriment which will result, or is likely to result, from the acquisition whether it occurs on a market-wide basis or not. Secondly, … the Tribunal is not centrally concerned in assessing whether there is a competitive detriment for the purposes of s 95AZH(1) with the different question posed by s 50 of whether the acquisition will, or will be likely to, result in a substantial lessening of competition in a market. The inquiry thrown up by s 95AZH is concerned with all benefits and detriments resulting from the acquisition including, no doubt, competitive ones. But so far as the competitive factors are concerned, the focus is much broader than it is under s 50; it is not limited only to detriment in a market nor, even where markets are concerned, with competitive lessenings to which s 50 might otherwise apply. …
 There is little doubt, in light of the principles discussed above, that the competitive effect advanced by the ACCC was a detriment within the scope of s 95AZH(1) and thus a mandatory relevant consideration that had to be considered. If the Tribunal failed to take account of this matter then, at least prima facie, its decision must be set aside. …
 It is not possible to say that if the Tribunal had concluded that the narrower detriment to which the ACCC pointed to in fact existed that this balancing exercise would necessarily have concluded the same way that it did. Consequently, it is not possible to say that the failure to take into account the detriment put forward by the ACCC was immaterial to the outcome …
 … the argument that the Tribunal failed to take into account the detriment in the segment which it had put forward should be accepted. … Consequently, the ACCC is entitled to an order that the Tribunal’s decision be set aside ab initio… One way of characterising the legal error is that the Tribunal failed to carry out its task and made a jurisdictional error by omitting to deal with a central issue raised by the ACCC in Tabcorp’s application to the Tribunal ….
Ground 2: The With and Without Test
On the second ground (failure to apply ‘with and without’ test) the Tribunal observed that while the test might be useful and is not forbidden to the Tribunal, it is not essential. In particular, it is not a substitute for the words of s 95AZH(1) which adopts the phrase: ‘would result, or be likely to result, in’ (para 56).
The Court observed in this respect that as the Tribunal found the detriments alleged did not exist that the issue did not arise; they therefore rejected this ground.
Ground 3: Assigning weight to benefits
Importantly, on the third ground, the Court noted that all that is required of the Tribunal is to assess the benefit to the public likely to result from the merger in all the circumstances; while it was legitimate to apply the modified total welfare standard, this does not require the Tribunal to explicitly give weight to each benefit (para 68). On this the Court concluded:
[para 68]: … we are sceptical of the ACCC’s submission, even on the favourable assumption that s 95AZH(1) does carry within it the modified total welfare standard, that it would require the Tribunal to give explicit weightings. Apart from showing how far the ACCC’s submission has wandered from the text of s 95AZH(1), the submission ignores the reality that much administrative decision making involves the weighing of imponderables or incommensurables. It would be unworkable to require the Tribunal explicitly to give a weight to each benefit and we would strain to avoid such a construction were it necessary. It is not, however, necessary so to strain. Section 95AZH(1) does not require what the ACCC suggests. The assessment of benefits and detriments must be complete and the Tribunal must, no doubt, weigh them. This is not necessarily, however, an arithmetical or accounting process. As we have said above, it may involve an instinctive synthesis of otherwise incommensurable factors.
All Grounds put forward by CrownBet were rejected.
The Court ordered the Tribunal’s decision to be set aside and for the matter to be referred back to the Tribunal to consider in a manner it deems fit – this will not necessarily mean a further hearing is required.
Read the judgment
The judgment is a relatively short (26 pages) and easy to read. It is now available from Jade and AustLII:
- ACCC v Australian Competition Tribunal  FCAFC 150 (Jade)
- ACCC v Australian Competition Tribunal  FCAFC 150 (AustLII)
- John Durie, ‘Tabcorp-Tatts tie-up hits fresh hurdle as doubts loom over tribunal’s jurisidiction’ (The Australian, 22 September 2017)
- Damon Kitney, ‘ACCC “won’t be rushed on Tatts”‘ (The Australian, 22 September 2017)
- Nick Toscano, ‘Tabcorp, Tatts confident of merger despite dangers of longer delay’ (SMH, 22 September 2017)
- John Stenshold, ‘Tabcorp Tatts deal faces further delays’ (AFR, 21 September 2017)
For more media see Wednesday’s blog piece.
For more detail on the Taborp/Tatts authorisation application and the Tribunal decision see my Tatts/Tabcorp merger page.