An Australian court Wednesday dealt a blow to a planned Aus$8.6 billion (US$6.9 billion) merger of gambling giants Tabcorp and Tatts, ordering a review of the deal following competition concerns.
Tatts and Tabcorp have for years pursued the idea of closer ties to try to cut costs and pursue opportunities globally, and announced a merger plan last October.
When the Australian Competition and Consumer Commission (ACCC) raised concern about the impact on Queensland state's gambling services, Tabcorp took the plan to the body that reviews ACCC decisions, the Australian Competition Tribunal, to try to sidestep the watchdog.
The tribunal approved the merger in June. But the Federal Court set aside that decision and referred the merger back to the tribunal for further consideration.
The reasons behind the court decision were not released but it renews uncertainty over the mega-merger.
The ACCC welcomed the move, saying it believed the tribunal had not properly tested the competition risks and had not given enough weight to the impact on consumers.
A separate organisation called CrownBet, which is majority-owned by James Packer's Crown Resorts, had also requested a review.
While the tribunal reviews decisions by the ACCC, it is sometimes seen as more focused on the benefits for the merger partners. The watchdog tends to give more weight to consumer concerns.
Tabcorp Holdings (Other OTC: TABCF - news) runs similar operations in Victoria and New South Wales, with a broadcasting and media arm built around Sky Racing. They both also compete in online gambling.