Sea Swift Pty Ltd, a subsidiary of Sea Swift (Holdings) Pty Limited (ACN 159 387 390) - s.87B undertaking

Company or individual details

  • Sea Swift Pty Ltd, a subsidiary of Sea Swift (Holdings) Pty Limited (ACN 159 387 390)
    010 889 040

Undertaking

The ACCC’s review

On 9 December 2014 the Australian Competition and Consumer Commission (ACCC) commenced a review of whether Sea Swift Pty Ltd’s (Sea Swift) proposed acquisition of assets associated with the Toll Marine Logistics business in the Northern Territory and far north Queensland (the Proposed Acquisition) would contravene section 50 of the Competition and Consumer Act 2010 (Cth) (the Act).

As part of the Proposed Acquisition, Sea Swift would acquire the lease between Perkins Properties Pty Ltd and the Arnhem Land Aboriginal Council in relation to the Gove Wharf at Melville Bay Rd, Foreshore Drive, Nhulunbuy (the Gove Lease).

During the course of the ACCC’s review, Sea Swift attempted to alleviate the ACCC’s competition concerns by offering an undertaking under section 87B of the Act. The proposed undertaking included obligations for Sea Swift to provide third party access to the roll-on, roll-off ramp at Gove (Gove Wharf).

On 9 July 2015 the ACCC decided to oppose the Proposed Acquisition (which included the undertaking) on the basis that it was likely to substantially lessen competition. The ACCC considered that the undertaking offered by Sea Swift lacked a number of features necessary for an effective access undertaking and therefore was insufficient to ensure Sea Swift’s competitors would have access to the Gove Wharf on terms that would enable them to effectively compete. The ACCC also had other concerns with the proposed acquisition that were not alleviated by the proposed undertaking or other conditions that had been proposed by Sea Swift during the review.

Application to the Australian Competition Tribunal for authorisation

On 4 April 2016, Sea Swift applied to the Australian Competition Tribunal (the Tribunal) for authorisation of the Proposed Acquisition under section 95AT(1) of the Act. This test requires the Tribunal to be satisfied that the Proposed Acquisition would result, or be likely to result in such a benefit to the public that it should be allowed to occur.

As part of Sea Swift’s application to the Tribunal, it stated that it was willing, as a condition of authorisation, to enter into a s87B undertaking that it will ensure unhindered and non-discriminatory access to the Gove Wharf for third parties, at commercial rates (the Gove Lease Undertaking). The key provisions of the Gove Lease Undertaking were similar to the provisions of the undertaking that Sea Swift offered during the ACCC’s review (and that the ACCC did not accept).

The ACCC expressed concerns to the Tribunal about the effectiveness and enforceability of the Gove Lease Undertaking. These concerns are detailed in the ACCC’s report to the Tribunal dated 18 May 2016.

On 1 July 2016 the Tribunal granted authorisation for the Proposed Acquisition subject to conditions. The conditions are detailed in the Tribunal’s determination, a copy of which is available at https://www.competitiontribunal.gov.au/decisions/year/2016

One of the conditions relates to the Gove Lease. This condition requires that Sea Swift:

  1. by the completion date of the Proposed Acquisition has executed and given the Gove Lease Undertaking to the ACCC;
  2. complies with the Gove Lease Undertaking in all material respects unless and until released from it by the ACCC; and
  3. does not transfer the Gove Lease without the approval of the ACCC.

The Undertaking

Sea Swift states that the objective of the Gove Lease Undertaking is to require Sea Swift to provide third parties with access to services at the Gove Wharf on an open, non-discriminatory basis.

On 11 August 2016, Sea Swift executed the Gove Lease Undertaking. The undertaking was given to the ACCC on 5 September 2016.

In light of the Tribunal’s determination to authorise the Proposed Acquisition subject to conditions, which included the obligation on Sea Swift to give the Gove Lease Undertaking to the ACCC, and taking into account all relevant considerations, the ACCC signed the undertaking on 18 October 2016.

The QGIF Undertaking

QGIF Taylor BidCo Pty Ltd (QGIF) is a company incorporated by QIC’s Global Infrastructure Fund to acquire 100 per cent of the shares in Sea Swift Holdings (Sea Swift Holdings). Through this transaction, QGIF acquired control of Sea Swift Holdings' wholly owned subsidiary, Sea Swift.

Clause 8 of the Sea Swift Undertaking states that in the event that a Change of Control is reasonably expected to occur before the withdrawal of this Undertaking in accordance with clause 4.4(a), Sea Swift must:

  1. notify the ACCC of this expectation; and
  2. only implement a Change of Control to another person or entity if that person or entity has given a section 87B undertaking to the ACCC that requires it to comply with the same obligations as are imposed on Sea Swift pursuant to its undertaking, or on terms that are otherwise acceptable to the ACCC, unless the ACCC has notified Sea Swift in writing that a section 87B undertaking under this clause is not require.

Sea Swift subsequently confirmed that its shareholders had entered into an agreement whereby QGIF will acquire 100 per cent of the shares in Sea Swift Holdings, and therefore a Change of Control as defined in clause 8 of the Sea Swift Undertaking, is reasonably expected to occur.

On 24 October 2019, QGIF offered this undertaking to satisfy the requirement contained in clause 8 of the Sea Swift Undertaking.

Please note, Schedule 2 of the QGIF undertaking is a copy of the equivalent schedule in the Sea Swift undertaking and a clearer version of Schedule 2 can be found at pages 44-52 of the QGIF undertaking PDF.