ACCC clears Waratah acquisition of Hunter Towage

7 June 1999
The Australian Competition and Consumer Commission will not intervene in the Waratah acquisition of Hunter Towage Services, ACCC Chairman, Professor Allan Fels said today.

"The acquisition was cleared on the condition that Waratah provide undertakings in relation to the conduct of the towage business in the future to ensure that the benefits of competition between Waratah and HTS in the Port of Newcastle over the past few years are maintained".

Waratah Towage is a joint venture between Adsteam Marine and Howard Smith that operates towage businesses in Port Botany, Port Jackson and the Port of Newcastle. Late last year Waratah advised the ACCC of its intention to acquire Hunter Towage Services, a consortium consisting of BHP and a number of overseas ship operators.

The ACCC conducted extensive market inquiries of shippers, ship operators, agents and other interested parties. On the basis of these market inquiries the ACCC formed the view that the proposed acquisition was likely to substantially lessen competition in the Newcastle market for the provision of towage services.

Waratah subsequently proposed a series of undertakings to the ACCC to address its concerns about the proposed acquisition. This proposal was put to market participants for their views and, on balance, market participants supported the proposed undertakings subject to a few additional provisions and changes. The ACCC then sought Waratah's agreement to altering the proposed undertakings in line with the proposals put forward by market participants.

Waratah has now provided an undertaking whereby it would, for a period of three years: maintain prices for towage services in Newcastle at current levels; and not introduce any new charges or increase any existing charges for the provision of towage services in Newcastle.

Waratah also undertook to only increase tariff rates in Newcastle after the initial three year period in accordance with the requirements of the Prices Surveillance Act 1983 as contained in a notice in writing from the ACCC. This undertaking is to be in force for as long as the declaration under the Prices Surveillance Act in relation to the provision of towage services in the Port of Newcastle is in place. Waratah also undertook to enter into a service agreement with the Newcastle Port Corporation to ensure that service levels do not decline in the port post acquisition and that the benefits arising from any rationalisation in the port can be fully realised.

Waratah has also undertaken to provide the ACCC with financial information about the operation of the Waratah towage business in Newcastle on an annual basis, so that the ACCC can monitor the level of efficiencies generated post-acquisition.
Release number: 
MR 086/99
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