Burdened ACCC tackles Asciano and VW issues

Sims highlights workload as farming groups demand strengthened oversight on monopoly rents

Burdened ACCC tackles Asciano and VW issues
Rod Sims says there is much for the ACCC to do.


Australian Competition and Consumer Commission (ACCC) is groaning under the weight of examining a slew of big mergers and acquisitions while keeping an eye on developments with Volkswagen, chairman Rod Sims has told a Queensland gathering.

Two days before the commission is due to issue a response on Brookfield’s $9 billion Asciano takeover, which is undergoing ‘public informal merger clearance’ process, Sims reveals at a Brisbane Club that its course is still unclear – it will be either a final decision or the release of a ‘statement of issues’.

That job comes at a time when the ACCC is examining including: Royal Dutch Shell’s proposed acquisition of BG Group; Coles’ proposed acquisition of nine Supabarn supermarkets; Foxtel’s proposed acquisition arrangements with Ten Network Holdings; and Haliburton’s proposed acquisition of Baker Hughes.

"The ACCC has an unprecedented number of complex merger assessments before it," Sims says.

"These are all transactions of significant importance to the Australian economy and it is therefore important that they are assessed carefully and correctly."

Much of the heat in the issue comes from agricultural and farming interests that have noted agribusiness CBH Group’s fiery negotiations with Brookfield Rail in Western Australia.

Grain Producers Australia (GPA) says the ACCC must continue to oversee rail freight networks, supported by an appropriate regulatory framework, if the takeover is allowed to proceed.

GPA chairman Andrew Weidemann says that "if there ever was an example of how not to do things, it would have to be the lease of the grain rail freight network in Western Australia to Brookfield that enabled the company to extract monopoly rent and leave WA’s grain growers worse off".

"Grain growers in Western Australia have highlighted the way their rail asset has been allowed to decline through insufficient maintenance expenditure, all while they are forced to pay more in charges to use the network," Weidemann adds.

"The regulatory environment is clearly inadequate, the grain industry is losing value and this appalling situation can only reduce public support for foreign investment, at a time when Australia needs to encourage investment and grow economic activity.

"We saw a similar situation to this in Victoria some years ago, when the rail freight network was privatised and the result was that the network fell into disrepair, rail services became uncompetitive and much grain was forced onto road, with the eventual result that the Victorian Government had to resume ownership."

"Successive governments have been forced to spend large sums of money in rehabilitating the Victorian network, with much more still required – all while the challenge of getting grain to port has become the industry’s biggest bottleneck and a major loss of supply chain productivity.

"Australia must learn from these examples and declare ‘no more’."

The strengthening of oversight has seen a rare alignment of rural rail customers and the Rail, Tram and Bus Union.

On VW, which admitted last week that more than 17,000 of its commercial vans in Australia may be affected by the emissions scandal, the ACCC chairman wants more information.

"We are still pressing VW Australia to understand the extent of consumer detriment," Sims says.

"For example, without the defeat device, how do the actual emissions compare to the relevant Australian Standard?

"Further, what will be the impact of the proposed ‘fix’ on the vehicles fuel economy and performance?"

"The ACCC’s enforcement investigation into potential breaches of mandatory standards and the Australian Consumer Law is well underway."

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