accepted court enforceable undertakings from Patrick Corporation that addressed the competition concerns arising from Patrick's proposed acquisition of FCL
decided not to intervene in the proposed acquisition of FCL Interstate Transport by Patrick Corporation.
The ACCC originally decided to oppose the proposed acquisition of FCL on 7 September 2005. However, it considers that since that time there have been changes in the likely level of future competition in the relevant markets—and that the undertakings offered ensure that the level of competition will not be lessened in the future due to the proposed acquisition of FCL.
When the ACCC opposed the acquisition of FCL one of the key concerns was the potential for Patrick and Toll, through Pacific National, to discriminate against other freight forwarders if Patrick acquired FCL. Another concern was an increase in the level of barriers to entry, because potential rivals to Pacific National would not be able to access FCL's freight volumes if Patrick owns FCL.
The ACCC still considers these competition issues to be potential concerns, but Patrick is currently pursuing capacity allocation from Pacific National to begin its own rail service and is also seeking the break-up of Pacific National. It believes that if Patrick is successful and its actions result in there being two significant independent rail competitors for interstate, containerised, freight rail line-haul, particularly on the east–west corridor, it will address the competition concerns and lead to a significantly higher level of competition. The ACCC considers that the acquisition of FCL is an important part of Patrick's attempts to achieve this outcome because FCL provides Patrick with significant container volumes to place on Patrick's proposed new rail services.
However, if Patrick's proposed actions in relation to Pacific National fail to address the competition concerns, the ACCC has broad powers to order divestment of FCL and other Patrick assets.
The ACCC considered the proposed acquisition of FCL by Patrick independently of the proposed acquisition of Patrick by Toll. However, the undertaking will require Patrick to quickly divest FCL through an agent in the event that Toll acquires a controlling interest in Patrick shares.
In addition to the obligations relating to the divestment of FCL and other Patrick assets, Patrick is also required to hold FCL separate and not interfere in the FCL business. Patrick is also required not to discriminate in favour of FCL over other freight forwarders.
In the process of its examination of this merger, the ACCC took into consideration information and submissions made in relation to the proposed undertakings by participants in the transport industry, including customers, competitors and industry bodies.
The undertakings are available on the ACCC's website.
A public competition assessment detailing the reasons for the ACCC's decision will also be available on the ACCC's website in due course.
