If I were to tell you that two of Australia’s largest supermarket chains, Coles and Woolworths, do not compete with each other – that they have no interest in outperforming the other, or secret desire to see the other lose ground – would you believe me? Probably not. All businesses in an industry compete for market share, whether its restaurants, toy manufacturers, cable companies, or retail and online betting operators.
Competition is what drives industries. When two or more providers of the same service compete for customers, it keeps prices low and markets fair. If Woolworth’s were the only grocery store to buy basic necessities from – bread, milk, eggs, produce, etc. – they could charge any amount they wanted. We would have no choice but to pay it, or go without.
This is the reasoning behind all major governments’ aversion to monopolies. A monopoly occurs when a company, or group of related companies, have exclusive control over an individual market. The end result is generally profiteering, price gouging and other negative issues for customers.
The Australian Competition Tribunal has been tasked with preventing a monopoly from occurring in the nation’s racing and sports gambling industry as Tatts Group and Tabcorp seek to close an $11 billion merger deal.
It Looks Like a Monopoly, But It’s Not?
The problem is that Tatts and Tab are the only two betting brands in the retail space. Thus a merger between the two would certainly seem to be promoting a monopoly.
Cameron Moore, senior council for Tabcorp, doesn’t seem to think so. He told the Tribunal on Thursday that these two brands “don’t compete” in Australia’s retail or mobile betting market.
In his closing statements, Moore told the Tribunal that Tabcrop’s concerns are focused solely within the online betting space, where they compete with major corporate bookmakers like Bet365, CrownBet and Sportsbet. Following a Tab/Tatts merger, he said the company would still be hard pressed to compete against the industry’s mobile betting giants.
Moore argued that the steep rise in online betting has diversified the industry so dramatically, that even if Tab and Tatts (who own all of the retail betting licences across Australia) merge, their relatively low market share in the online betting sector would prevent them from holding anything close to resembling a monopoly.
“The online space is a very closely-fought, competitive space indeed in Australia. It’s characterised by the relentless rise of online corporate bookmakers, who have out-competed Tabcorp and Tatts,” said Moore. “Tabcorp and Tatts have lost market share year after year.”
Moore went on to argue that Tab and Tatts “don’t compete to any great extent, certainly not in retail, and not even in online”. He told the Tribunal that, when it comes to mobile betting, these two brands “face significant competition from others.”
Will Degrading One’s Own Mobile Betting Prowess Really Work?
If the Tribunal accepts that retail and online betting markets are one, and that the market for mobile betting is significant enough to alleviate dominance by the retail sector, it just may work. The results of the hearing should be in following final statements from the Australia Competition and Consumer Commission (ACCC), CrownBet, Racing.com and Racing Victoria on Friday.
Those final arguments won’t help Tacorp/Tatts, especially where the ACCC is concerned. The Commission previously published a Statement of Issue, touting a multitude of concerns.
The ACCC said the merger “raises complex competition issues in a range of different areas.” It later called the two companies’ projected revenue and public benefits “overstated”.