Preliminary competition concerns regarding DP World Australia’s proposed acquisition of Silk Logistics have been raised by the Australian Competition and Consumer Commission (ACCC) in a Statement of Issues published on March 13.
The concerns pertain to DP World’s extensive container stevedoring services at Port Botany, Port of Melbourne, Port of Brisbane and Fremantle, where it services roughly a third of the containers processed at these major ports.
Silk is one of Australia’s only door-to-door container logistics providers in Australia and hauls import and export containers to and from the ports where DP World operates.
Should the acquisition progress, it would see a major container stevedore own a national container transport provider.
In addition to this, the ACCC has also raised concerns the acquisition could see DP World gain the ability to access and use commercially sensitive data about Silk’s rivals in a way that damages competition.
“We have heard concerns that DP World’s ownership of a national container transport provider is likely to reduce competition in the supply of container transport services,” ACCC Commissioner Dr Philip Williams says.
“This could lead to higher prices and reduced quality for Australian importers and exporters.
“Our review is focused on DP World Australia’s ability and incentive to either increase terminal fees or worsen the quality of terminal services for container transport providers that compete with Silk, after the acquisition.
“We are also assessing whether DP World Australia, after acquiring Silk, is likely to offer below-cost transportation prices to importers and exporters if their containers are also picked up and dropped off at DP World Australia’s stevedoring terminals.
“This is because a discounting strategy involving below-cost prices could later reduce container transport competition allowing a combined DP World Australia and Silk to raise prices later.”
DP World Australia announced the planned acquisition of Silk Logistics in November 2024, in which it would acquire 100 per cent of shares in the company with a cash offer of $2.14 per share.
The binding Scheme Implementation Deed valued the equity of Silk Logistics at roughly $174.5 million.
“DP World Australia is excited about the opportunity to welcome Silk Logistics into our portfolio,” CEO and Managing Director, Asia Pacific, DP World Glen Hilton said at the time.
“This acquisition aligns with our strategy to deliver complementary logistics solutions for a broad customer base across Oceania.
“Combining DP World Australia’s terminal operations with Silk Logistics’ value add services enhances our capability to deliver enhanced solutions for customers.”
DP World has since released a statement regarding the ACCC’s concerns, and says it is still “committed to the transaction”.
“DP World acknowledges the ACCC Statement of Issues released yesterday regarding our proposed acquisition of Silk Logistics,” a company statement released on Friday afternoon reads.
“The Statement of Issues sets out the ACCC’s preliminary views only and is not a final decision.
“DP World remains committed to the transaction and will continue to work together to progress ACCC and FIRB approval and all other regulatory steps required for implementation of the transaction.
“DP World believes this acquisition will deliver significant benefits to Australian supply chains, enhancing efficiency, reliability and service offerings for customers.”
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