ACCC critiques Aurizon One Rail idea

The consumer body says the acquisition may remove competition in the market

ACCC critiques Aurizon One Rail idea
The ACCC is consulting on whether Aurizon can acquire One Rail

The ACCC has outlined its concerns with Aurizon’s proposed acquisition of One Rail in a statement it released today.

The ACCC says it is seeking public comment on whether these concerns would be addressed by Aurizon’s divestment of One Rail’s east coast business.

Both Aurizon and One Rail supply rail haulage services for coal in New South Wales and Queensland, with Pacific National being the third main supplier of coal haulage in these states.

The ACCC’s concerns centre around Aurizon potentially monopolising the market and limiting competition, as it says Aurizon is the largest supplier of coal haulage in Queensland and the second largest in NSW before acquiring One Rail.

The ACCC says One Rail is a well-established third supplier in NSW and a recently entered third competitor in Queensland, meaning the acquisition could have a significant impact on the industry.

"By reducing the number of competitors in the supply of coal haulage in NSW and Queensland from three to two and removing an important competitor to Pacific National and Aurizon, we have preliminary concerns that the proposed acquisition of One Rail by Aurizon would be likely to substantially lessen competition," ACCC chair Gina Cass-Gottlieb says.

The ACCC says it’s also considering whether the proposed acquisition would substantially lessen competition in one or more regional markets for the supply of rail haulage services for bulk commodities other than coal.

RELATED ARTICLE: Queensland buys Aurizon railyards back

Although these parties don’t currently compete in the supply of these services, Aurizon has publicly stated its intention to continue growing its non-coal bulk commodity rail haulage business.

"We’re also considering the impact of this proposed acquisition on potential future competition in the supply of non-coal bulk rail haulage," Cass-Gottlieb says.

Aurizon has also proposed a divestment undertaking that will address the ACCC’s concerns, including investigating its east coast business that would allow Aurizon to sell One Rail either by a trade sale or demerging it as a new separate entity.

"A critical issue for the ACCC is determining whether Aurizon’s divestiture undertaking will replace the competition that would be lost because of the acquisition," Cass-Gottlieb says.

The ACCC will need to be satisfied that any new purchaser or demerged business will be an effective stand-alone competitor in supplying coal haulage and non-coal bulk commodity rail haulage.

The ACCC invites submissions and says it will announce its final decision on July 14.

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