Move to split up group allows vertical integration concern to fade
The Australian Competition and Consumer Commission (ACCC) has given Qube- and Brookfield-led consortia the go-ahead to carve up Asciano.
The move resolves the largest potential regulatory blockage to the deal.
The ACCC began its investigations a year ago, when Brookfield’s first takeover tilt emerged.
Since then, its form has changed with Qube’s counter bid and a deal between the parties.
ACCC’s most recent inquiry line was on the containerised freight supply chain through Botany, Brisbane, Fremantle and Melbourne ports, particularly the vertical integration of Asciano’s Patrick container terminals with Qube’s road and rail container transport services and empty container parks.
“The ACCC conducted extensive inquiries with a large number of industry participants,” ACCC chairman Rod Sims says.
“A broad range of issues were raised across different aspects of the supply chain.
“After careful consideration, the ACCC has concluded there is not likely to be a substantial lessening of competition in any market.”
The ACCC expressed some competition concerns in a ‘statement of issues’ it released in May,
but the parties have since restructured the proposed acquisition so that ACFS will no longer be vertically aligned with Patrick.
“This restructure resolved a number of the ACCC’s concerns,” Sims says.
“It means that the effect of the proposed acquisition is a substitution of Qube for ACFS as the downstream container logistics provider linked to Patrick.”
The ACCC also considered whether the vertical integration of the Patrick container terminal at Port Botany with Qube’s NSW rail operations would result in discrimination against Qube’s competitors.
A key issue was whether this would reduce competition in the market for rail-based container transport services from regional NSW to Port Botany, with particular regard to Qube’s interest in the Moorebank intermodal terminal.
The ACCC says it conducted in-depth inquiries with a broad range of Port Botany stakeholders and identified several constraints on the ability and incentive of Patrick to discriminate in favour of Qube trains at Port Botany.
These constraints include the potential loss of business to rival stevedores, Brookfield and others having a 50 per cent interest in Patrick, and the regulation of rail services.
The ACCC also considered the role of NSW Ports as the lessor of the Patrick Container Terminal site, particularly given it is also the landlord of intermodal terminals at Enfield and Cooks River.
The ACCC considered NSW Ports has an incentive to limit any discrimination by Patrick Container Terminals in favour of Qube’s interests.
“The combined strength of these constraints has led us to conclude that the acquisition would not cause an increase in prices or a reduction in the quality of regional rail container export services to Port Botany,” Sims says.
The ACCC’s analysis is provided in the Public Competition Assessment, to published today at: Consortium comprising Brookfield, Qube & Others – proposed acquisition of Asciano Limited