ACCC not to oppose Freight Australia acquisition
The Australian Competition and Consumer Commission will not intervene in the acquisition of Freight Australia by Pacific National Pty Ltd after accepting court-enforceable undertakings, ACCC Chairman, Mr Graeme Samuel, said today.
"The ACCC was concerned that the acquisition would cement Pacific National's large market share in rail freight between the eastern States and Perth", Mr Samuel said. "In particular, the ACCC was concerned that the acquisition may make it more difficult for potential entrants to find rail terminal space in Melbourne. The ACCC was also concerned that the current main competitor to Pacific National for freight between Melbourne and Perth, Specialised Container Transport (SCT), is presently reliant on Freight Australia to provide the locomotives and crew.
"In response to the concern regarding terminals in Melbourne, the ACCC was offered undertakings from Pacific National that would facilitate entry to the Somerton rail terminal. Somerton rail terminal is owned by Austrak AFM Pty Ltd, but the rail tracks between Somerton terminal and the mainline interstate track are currently controlled by Freight Australia. Pacific National has undertaken to give control of those tracks to the Commonwealth Government-owned Australian Railtrack Corporation Ltd.
"In response to the concern regarding SCT, the ACCC took into consideration evidence from Pacific National that it had very recently agreed with SCT to a longer contract on the existing terms. Also it would make changes that would lessen the effect of the acquisition on SCT.
"The undertakings address the aspects of the acquisition that give rise to a substantial lessening of competition, in breach of section 50 of the Trade Practices Act," Mr Samuel said. "Many market participants expressed concerns about the level of competition in parts of the rail industry and about access to rail freight infrastructure. However, the ACCC can only consider the effects on competition that arise from the acquisition itself.
"Particular concerns were raised about access to Victorian rail infrastructure. The ACCC took into consideration these concerns. However, ultimately these concerns will need to be addressed by the relevant State Governments, who are the ultimate owners of much of the infrastructure".
Pacific National made several offers of undertakings to the ACCC before the ACCC finally accepted the revised undertakings regarding Somerton and SCT. The earlier offers related in part to access procedures at North Dynon rail terminal. The ACCC did not consider that the earlier undertakings addressed the competition concerns because there was a potential for these undertakings to become unworkable.
"As noted above the ACCC considers that there are a range of competition issues in regard to the rail industry, both nationally and in Victoria. While these issues are important in the context of ensuring a competitive industry, the ACCC must limit its assessment of the acquisition to the requirements of section 50. A number of longer term policy issues, including access to infrastructure, need to be resolved. Some of these issues will be canvassed in the detailed reasons for decision".
The reasons will be posted on the ACCC website (see below).