The Australian Competition and Consumer Commission will not oppose any of the three short-listed bidders for the joint sale of FreightCorp and National Rail Corporation, ACCC Chairman, Professor Allan Fels, said today.
The three consortia comprise one headed by the Australian Rail Group company, one involving a proposed rail joint venture by Toll and LangCorp, and one headed by Freight Australia.
"The ACCC has come to the view that a substantial lessening of competition would be unlikely no matter which of these consortia were selected as the preferred bidder for FreightCorp/National Rail.
"The ACCC's decision followed extensive market inquiries with customers, freight forwarders and rail operators. In reaching its view the ACCC examined likely constraints that the merged entity would face.
"For example in the north-south general freight corridor, road transportation acts to constrain the behaviour of rail companies, and any attempt to exploit rail bottlenecks between Melbourne, Sydney and Brisbane would likely see rail customers switch to road transport.
"The bulk freight task in Australia is characterised by increasing contestability as a result of the introduction of state based access regimes over the intrastate track in New South Wales, Victoria, South Australia and Western Australia. These developments are facilitating greater competition between rail operators and recent tender processes suggest that large contracts are attracting interest from rail operators based in other states. As well as facing future competition from other rail operators, the ability of the eventual acquirer of FreightCorp and National Rail to behave anti-competitively may also be constrained by the typically large scale bulk customers, many of whom own their own terminal facilities.
"Given these factors the ACCC concluded that any attempted exercise of market power by the merged entity could be thwarted either immediately or in the medium term.
"This decision not to oppose any of the short-listed bidders represents another example of the ACCC not preventing companies reaching the scale of operations necessary to be efficient whilst ensuring future competition within the transport sector is maintained".
The ACCC welcomes the Transport Policy objects of the sale, in particular the objective of developing a commercially sustainable and competitive freight business, able to contribute to an efficient, competitive and viable domestic freight industry. Pursuant to this objective the ACCC notes that the disposal of any surplus rolling stock, noted in the parties confidential submissions, will assist in achieving this objective. The upcoming privatisation of National Rail and FreightCorp may be seen as another step in the evolution of microeconomic reform in the Australian transport sector.