ACCC opposes Sea Swift Pty Ltd’s proposed acquisition of Toll Marine Logistics

9 July 2015

The Australian Competition and Consumer Commission has decided to oppose the proposed acquisition by Sea Swift Pty Ltd of the Northern Territory and far north Queensland marine freight business of Toll Marine Logistics Australia (a division of Toll Holdings Limited, whose ultimate owner is Japan Post) because it would be likely to substantially lessen competition.

“Sea Swift and Toll Marine are the two largest suppliers of marine freight services in the NT and FNQ and, on many routes, are the only two suppliers of scheduled freight services. Over the last two years, they have been engaged in a price war with each other,” ACCC Commissioner Roger Featherston said.

“During this price war, Toll has agreed to sell its business to Sea Swift for a substantial amount of money, and a 20% shareholding in Sea Swift. Not only would this merger eliminate the competition between them, it would also increase the barriers to entry or expansion for other freight providers.”

“The proposed transaction strengthens Sea Swift’s position and power in these markets and denies other freight suppliers the opportunity of expanding as a consequence of any exit by Toll.”

“As far as the ACCC is aware, Toll did not offer its business on the market or look for any other potential acquirer of the business or of any of the assets used in its business.”

“As Sea Swift is the party with the most to gain from an end to the price war and Toll’s exit from these markets, it is not surprising that Toll considered Sea Swift would pay the highest price for the business, but the ACCC has to consider the effects upon competition, not the commercial benefits to the party selling the assets,” Mr Featherston said.

The ACCC had previously expressed its preliminary view that the proposed acquisition was likely to substantially lessen competition. In an attempt to address this concern the parties offered undertakings to the ACCC. The ACCC considered the proposed undertakings and decided they were incapable of addressing the competition concerns.

The ACCC intends to issue a public competition assessment in due course. Further information is available from the public register at Sea Swift Pty Ltd - proposed acquisition of Toll Marine Logistics Australia.

Background

Sea Swift and Toll Marine Logistics are both providers of scheduled marine freight services to the Northern Territory, far north Queensland and coastal communities including the Torres Strait Islands.

Customers and communities in these remote regions of NT and FNQ require regular replenishment of basic inputs and supplies, including fuel for electrical generators. Large and small retailers in the regions, ranging from a major supermarket chain to community-owned stores, require regular, reliable deliveries, particularly for perishable food. Other customers require occasional freight services for items ranging from vehicles to household items. The communities are home to many disadvantaged consumers, often with very low incomes.

Some of these communities cannot receive freight by road at all or in any significant volume. This is either because they are located on islands or because the condition of the roads are often not good enough to handle trucks, particularly in the long tropical wet season.

Sea Swift Pty Ltd provides scheduled freight shipping services, cruise and marine transport, project logistics and mothershipping services in northern Australia (motherships deliver supplies to and collect catch from commercial fishing boats at sea). It was established in 1987 and is based in Cairns, Queensland. It recently expanded its services to Darwin, Gove and nearby communities in the Northern Territory where Toll Marine operates.

Toll Marine provides scheduled and charter shipping services in the NT and FNQ. It recently expanded its services into the Torres Strait where Sea Swift operates.  Toll Marine’s business also includes providing logistics services to the oil and gas industries, but these assets are not included in the proposed acquisition.

 

Release number: 
MR 118/15
Media enquiries: 
Media team - 1300 138 917

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