Key Points: Whether parties are competitors will be particularly
important when considering mergers, exclusive dealing or licensing
arrangements within the racing industry.
The Trade Practices Act (TPA) regulates a broad range of
behaviour of participants in the racing industry. It regulates what
competitors can and cannot agree upon. It also regulates whether
competitors may merge or combine in some way.
A key question in the assessment of whether behaviour will or
will not be permissible under the TPA is whether or not the persons
engaging in the conduct are competitors.
Regulation can have a significant effect on the extent to which
people compete. This has some interesting implications in an
industry such as the racing industry which is subject to somewhat
Racing regulations determine the dates on which a racecourse can
hold races for a particular code of racing. In areas where there is
more than one race course for a code, the racing regulator will
typically permit only one of those racecourses to hold a race on
any particular day. A race calendar will be determined by the
regulator and race days allocated to each racecourse. This ensures
the racecourse can attract the best races for their race day.
Without this regulation, the racecourses within an area would be
expected to compete and compete quite vigorously to attract
customers by holding the best races. This competition is
essentially removed by the regulation which sets the race calendar
in a way so that races are not held on the same day in one
So if, for example, the two principal horse racing clubs in
Sydney were to merge, we would expect that this would be unlikely
to substantially lessen competition in markets for conducting race
meetings in Sydney, or markets for providing thoroughbred racing
services in Sydney or providing services to race clubs in Sydney.
The reason for this is that the two principal clubs are unlikely to
compete for these services because the racing regulations prevent
them from holding races on the same day.
Another example of how regulation affects the degree of
competition in a racing market is in relation to advertising
restrictions. Until recently, NSW legislation prohibited interstate
totalisator operators and bookmakers from advertising within NSW.
The purpose of the regulations was to discourage interstate
operators from taking bets from NSW residents on races being held
outside the state to avoid loss of revenue for the NSW Government.
What this then meant was that interstate operators were not as
competitive within NSW as one would expect they would have been if
they had been allowed to advertise in NSW. The ACCC recognised in
its decision to oppose the 2006 proposal by Tabcorp to acquire
UNiTAB that the extent of interstate competition from totalisator
operators and bookmakers was limited. One reason for this was the
existence of the State prohibitions on interstate advertising.
A final example of how regulation may affect the degree to which
people compete is the law passed in Western Australia in 2007 to
make it an offence to bet with a betting exchange. This legislation
was successfully challenged by Betfair on constitutional law
grounds. However, if it had not been successfully challenged,
Betfair would have committed an offence each time it accepted a bet
from a person resident in WA. This would have significantly reduced
the extent to which Betfair and other betting exchanges could
compete for customers in WA.
What Does This Mean For The Racing
What this means for those involved in the racing and gaming
industry is that while decisions made in other industries may be
relevant to some degree, this industry has some quite particular
regulations which will affect the extent to which people compete
and ultimately the impact of the TPA upon them.
This will have a particular impact on them when considering
mergers and acquisitions within the racing industry or exclusive
dealing or licensing arrangements such as arrangements to grant
exclusive rights to broadcast races.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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