High Court puts ACCC Acacia Ridge sale appeal to bed


Aurizon able to finally offload intermodal terminal to Pacific National

High Court puts ACCC Acacia Ridge sale appeal to bed
Pacific National can now finalise the $205 million purchase

 

Pacific National (PN) is free to buy the Acacia Ridge Terminal from Aurizon after the High Court dismissed the Australian Competition and Consumer Commission’s (ACCC’s) application for special leave to appeal the Federal Court’s rejection of its reduced competition claims.

The ACCC first started proceedings against the transaction between the two rail freight giants in July 2018, alleging that the acquisition would deter a new entrant from providing competing interstate rail linehaul services.

It undertook an investigation into proposed acquisitions by PN of the Acacia Ridge Terminal and Queensland intermodal business.

It succeeded in obtaining an interlocutory injunction from the Federal Court restraining Aurizon from the announced closure of its Queensland intermodal business, which was subsequently purchased by Linfox.

The Federal Court dismissed the ACCC’s proceedings in May 2019, finding that, given PN’s access undertaking accepted by the court, the Acacia Ridge Terminal acquisition would not be likely to substantially lessen competition.

In May 2020, the Full Court dismissed the ACCC’s appeal, with the High Court now rejecting its application for special leave to appeal.

"The ACCC sought special leave to appeal to the High Court because we considered that this case raised important issues about the application of Australia’s merger laws," ACCC chair Rod Sims says.

"This case also involved important markets. We considered that Pacific National’s acquisition of the Acacia Ridge terminal would likely have a significant impact on competition in intermodal rail, with flow-on effects for consumers and the wider economy."

"The ACCC’s case centred around the proposed acquisition of the Acacia Ridge intermodal terminal in Brisbane.

"With the acquisition set to proceed, Australia will be left in the position where the dominant intermodal rail linehaul services provider will also own the critical infrastructure that potential competitors need to access in order to compete."

Sims notes the ACCC faces challenges in contested merger cases where a forward looking merger test is applied.

"The nature of the test, and the inherent uncertainties in predicting the future, make it difficult to prove that a change in the market structure after the merger will substantially lessen competition in the future.

"This task is further complicated by the need to prove that competition is likely to be substantially lessened compared to a hypothetical future in which the acquisition did not occur.

"These challenges raise important issues for the consideration of whether Australia’s current merger laws are fit for purpose."


How Sims rued the Federal Court ruling loss, here


In a release to the Australian Securities Exchange (ASX), Aurizon confirms it is now able to progress the $205 million sale of the terminal to PN, pending final approval by the Foreign Investment Review Board.

"The sale includes a non-refundable payment of $35 million already received by Aurizon.

"The balance of $170 million is payable to Aurizon on transaction completion which is expected during 2H FY2021.

"Tax payable on the sale is an estimated $40 million, resulting in net remaining proceeds of approximately $130 million."

PN expresses its satisfaction with the outcome.

"Pacific National welcomes today’s decision and is looking forward to adding the Acacia Ridge Terminal to its network of efficient freight terminals," a company statement notes.

"This network helps provide Pacific National with the ability to deliver crucial daily rail freight services for Australian businesses and communities as they recover from the negative economic and social impacts of the Covid-19 crisis.

"Pacific National is also actively working to ensure the many and varied benefits of Australian rail freight are incorporated into our nation’s growing freight task, including helping to improve road safety, lower emissions, and reduce traffic congestion and truck ‘wear and tear’ on local and state roads."

 

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