RAJ REPORT

ACCC only took 62 days to review AQUIS— — Aquis Group – proposed acquisition of the Reef Casino Trust

1 Comment


 

 

 

 

 

Aquis Group – proposed acquisition of the Reef Casino Trust

 

Type of assessment Informal Review
Reference 52869
Acquirer(s)
Aquis Group
Target(s)
Reef Casino Trust
Industry Casino
Summary
The Aquis Group (Aquis) proposed to acquire the Reef Casino Trust and its associated entities, which own and operate the Reef Casino in Cairns.

Aquis has also been shortlisted by the Queensland Government to develop an integrated resort and casino at Yorkey’s Knob, north of Cairns.

Outcome of assessment Not opposed
Total review days * 62
Commenced public review 9th April 2014
Date completed 21st August 2014
Market definition
The ACCC considered the proposed acquisition in the context of the supply of casino services to:
– non-VIP customers (both table gaming and gaming machine customers); and
– VIP customers from Australia and the Asia-Pacific.

The ACCC considered a VIP customer to be a high-value customer who receives valuable incentives to gamble with a casino such as complimentary accommodation, complimentary domestic or international airfares, and cash rebates for losses. Such customers spend a considerable amount at a casino per visit, and generally upwards of $20,000 per bet.

On the other hand, non-VIP customers range from ‘walk-in’ and tourist patrons through to those willing to spend many thousands of dollars at a visit to a casino, but who fall short of the amounts required to qualify as a VIP customer.

The ACCC considered that competition for non-VIP customers would only be between venues in Cairns and its surrounding suburbs. In contrast, casinos in Cairns would compete with other Australian casinos for VIP customers, and likely also with casinos in the rest of the Asia-Pacific (given Cairns’ proximity to the region).

For the purposes of its decision, the ACCC did not consider it necessary to determine whether there were separate markets for the supply of casino services to VIP and non-VIP customers, or whether these customers constituted different segments of a single market.

For the purposes of its competition analysis in this review, the ACCC assumed that suppliers of racing or sports wagering did not compete closely with casinos.

Competition analysis
The ACCC considered that the proposed acquisition was unlikely to substantially lessen competition in any relevant market.

Aquis has no existing casino interests in Australia (or elsewhere in the world), but proposes to develop a large resort, including a casino, at Yorkey’s Knob, 15km north of Cairns (the Aquis Resort). The Aquis Resort is one of two applicants shortlisted by the Queensland Government for the award of up to two casino licences as part of integrated resort developments in regional Queensland.

Development of the Aquis Resort is still at an early stage, and is conditional on a number of factors. The ACCC acknowledged that there was a level of uncertainty about whether the Aquis Resort would be developed, but considered the proposed acquisition on the basis that the Aquis Resort project was likely to proceed.

If the Aquis Resort proceeded, but the proposed acquisition did not, there would have been two casinos located in Cairns with different owners. Considered in this manner, the proposed acquisition represented a reduction in the number of casino owners in Cairns from two to one.

However, the ACCC considered that there was likely to be little overlap between the target customers of the Reef Casino and the Aquis Resort. The Reef Casino is a small regional casino and the majority of its customers are non-VIP Cairns residents and domestic tourists, making bets at relatively low stakes. The Reef Casino makes most of its revenue from gaming machines, rather than from table games.

In contrast, the Aquis Resort is proposed to be a large integrated resort development of a scale unprecedented in Australia, with extensive facilities and requiring substantial capital investment. The business case for the Aquis Resort (if developed) would be necessarily focussed on attracting high-spending international VIP customers from within the Asia-Pacific region.

As the two casinos would be targeting different sets of customers, one targeting VIP customers and the other non-VIP customers, competition was not likely to be lessened substantially by the proposed acquisition.

The ACCC also took into account the number of venues with gaming machines in Cairns. Although these venues are unable to provide the full suite of casino services, they may provide competition to the gaming machine aspects of the Reef.

Statement of issues
  • Aquis proposed acquisition of Reef Casino – Statement of Issues – 3 July 2014
    3rd July 2014
     MER14+6960.docx (124.2 KB)
  • Aquis proposed acquisition of Reef Casino – Statement of Issues – 3 July 2014
    3rd July 2014
     D14+87399.pdf (329.5 KB)
  • Statement of Issues: Corrigendum
    25th July 2014
     MER14+8126.pdf (218.4 KB)
  • Statement of Issues: Corrigendum
    25th July 2014
     MER14+7582.docx (77.8 KB)
Review timeline
Date Event
9th April 2014 ACCC commenced review under the Merger Process Guidelines.
1st May 2014 Closing date for submissions from interested parties.
22nd May 2014 Former provisional decision date of 5 June 2014 delayed at the request of Aquis Group to allow it to provide further information.
10th June 2014 ACCC received further information from Aquis Group.
24th June 2014 Former proposed decision date of 26 June 2014 delayed by ACCC to allow additional time to consider the proposed acquisition.
27th June 2014 Former proposed decision date of 30 June 2014 delayed by ACCC to allow additional time to consider the proposed acquisition.
3rd July 2014 ACCC published a Statement of Issues outlining preliminary competition concerns.
17th July 2014 Closing date for submissions relating to Statement of Issues.
24th July 2014 ACCC requested further information from the merger parties.
6thAugust 2014 ACCC received information from the merger parties.
21stAugust 2014 ACCC announced it would not oppose the proposed acquisition.

 

 

 

 

Aquis Group – proposed acquisition of the Reef Casino Trust.

Advertisements

One thought on “ACCC only took 62 days to review AQUIS— — Aquis Group – proposed acquisition of the Reef Casino Trust

  1. irrelevant…different issues examined by the 2 authorities. not a comparable process.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s