THE Australian Competition and Consumer Commission (ACCC) has expressed its concern about the contentious $8.9 billion takeover of Australian transport logistics company Asciano by the multinational Brookfield Infrastructure.
Making an interim announcement this morning, the competition watchdog has noted market participants, including the farm sector have "raised strong concerns about Brookfield's ability and incentive to favour Asciano's rail freight business Pacific National if was to take ownership".
Brookfield has a long-term lease on the rail network in Western Australia (known as Brookfield Rail) and transports coal to Brookfield's Dalrymple Bay Coal Terminal (DBCT) in central Queensland.
Both assets leases do not expire for 35 years.
Brookfield plans to acquire 100 per cent of in Asciano by way of a share scheme of arrangement.
"The ACCC is concerned that the vertical integration will lead to a substantial lessening of competition in related markets for the supply of above rail haulage services in WA and Queensland," ACCC chairman Rod Sims said.
"While there are state access regimes in place for these businesses, they are primarily intended to deal with market failure issues that are inherent for any monopoly infrastructure.
"They do not currently need to address the competition issues that arise from vertical integration."
The ACCC's general view was to see market competition rather than regulation whenever possible.
"Whether access regulation can provide appropriate outcomes in a situation of vertical integration depends on the extent of any competition concerns," Mr Sims said
"Competition concerns can be particularly acute in cases involving key infrastructure assets of a technical nature, which require many operational decisions to be made on a daily and longer-term basis."
Where the owner of such infrastructure vertically integrates with one of a very limited number of users of the infrastructure, then the ACCC considers that an access regime may not be capable of averting a substantial lessening of competition that would otherwise arise.
The ACCC has invited further submissions from those involved in the rail freight market, including the grain industry.
The deadline for responses is November 4, after which the ACCC is expected to announce its final decision on the Brookfield bid by December 17.
Andrew Marshall
National agribusiness writer for Fairfax Agricultural Media.
National agribusiness writer for Fairfax Agricultural Media.
