The Australian Competition and Consumer Commission is seeking an interim injunction in the Federal Court to prevent the merger of Sydney ports' two tug enterprises.

Acting Chairman, Mr Allan Asher, said today the ACCC had sought the injunction to stop Howard Smith Industries Pty Limited (HSI), Adelaide Steamship Company Limited (Adsteam) and Waratah Towage Pty Limited (Waratah) completing several agreements for the sale/charter of four tugs currently used by J Fenwick and Co Pty Ltd (Fenwick).

"The ACCC was told of the proposed merger late on 22 December with the companies' intending to complete on 17 January. In the short time frame, including the traditional Christmas slow down, the ACCC assessed the impact of the merger.

"It was obvious that the merger would turn the current duopoly into a monopoly, and shut out any possible future competition," Mr Asher said.

"From its inquiries, the ACCC was able to ascertain that with a market definition of Sydney ports (Port Jackson and Port Botany):

  • barriers to entry into the towage market are high and arose from economies of scale, capital requirements and excess capacity;
  • users are unable to exercise countervailing power and generally faced a common fixed tariff;
  • users could not switch to another service if the monopoly power was abused; and
  • a monopolist would have the market power to raise prices or profit margins significantly.

"The ACCC moved to gain the injunction after the parties refused to abandon or modify their proposal."

The hearing continues before Justice Whitlam, in the Federal Court, Sydney tomorrow (Tuesday).