ACCC outlines concerns over Brookfield Asciano deal

In a statement of issues, the regulator highlights potential anti-competitive effects of vertical integration

ACCC outlines concerns over Brookfield Asciano deal
Rod Sims says there are concerning aspects to the proposed Asciano-Brookfield merger


The Australian Competition and Consumer Commission (ACCC) says it does have concerns over the proposed Brookfield Infrastructure merger with Asciano.

The commission has released a 'statement of issues' document that outlines its fear that WA’s state-based access rules are not designed to combat the monopoly power that arises from a vertically integrated business.

"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 says.

"While there are 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."

Under the deal, announced in August, Brookfield will take on a 55 per cent share of Asciano, at a cost of around $12 billion.

In one example of the vertical integration that the tie-up will allow, Brookfield will control both the Patrick terminal at Fremantle and the bulk grain rail lines leading to it.

That has WA farmers concerned, and the state farmers’ federation has earlier urged the ACCC to look closely at the competition impacts of the deal.

A similar issue exists at the Dalrymple Bay coal terminal, just south of Mackay in Queensland. Brookfield already manages the terminal but this would be complimented by the above line rail business of Pacific National if the Asciano deal goes ahead.

"Post-acquisition, Brookfield would have the ability and incentive to foreclose competitors of Pacific National that haul coal to Dalrymple Bay and will have access to sensitive commercial information of those competitors," the statement of issues notes.

"The ACCC’s strong view is that the only way to avoid the risks to competition that are likely to be created by vertical integration is to avoid the creation of a vertically-integrated market structure altogether," it continues.

"Access regulation has an important role in certain circumstances of market failure in the economy (such as the existence of a natural monopoly). However, it is preferable to avoid structural changes to the market that would exacerbate such market failures."

The ACCC is now accepting submissions in response to its statement of issues. The opportunity to comment will close on November 4, with the regulator expected to make a final judgement on the deal on December 17.

You can also follow our updates by joining our LinkedIn group or liking us on Facebook