Patrick Corporation Limited - s.87B undertaking

The section 87B undertaking was offered by Patrick Corporation Limited (Patrick) in connection with its proposed acquisition of FCL Interstate Transport Services (FCL) in order to alleviate competition concerns identified by the ACCC under section 50 of the TPA.

The ACCC decided to oppose the proposed acquisition of FCL on 7 September 2005. A Public Competition Assessment outlining the reason for that decision is available on the ACCC's website (www.accc.gov.au) by following the link to 'Mergers' and then the link to 'Public Competition Assessments'.

Patrick requested that the ACCC reconsider the acquisition in light of changed circumstances and in light of undertakings it offered to the ACCC. The ACCC conducted market inquiries in relation to the proposed undertakings during late March and early April 2006. In response to a number of issues raised during market inquiries, Patrick offered revised undertakings which the ACCC accepted on 13 April 2006.

While the ACCC considered the competition issues that gave rise to its decision to oppose the acquisition on 7 September 2005 were still potential concerns, circumstances had changed such that Patrick had begun to pursue capacity allocation from Pacific National in order to begin its own rail service and was also seeking to break up Pacific National. Pacific National is the leading provider of interstate container rail line-haul and is a joint venture between Toll Holdings Limited and Patrick. The ACCC considered that the proposed acquisition of FCL was an important part of Patrick's attempts to gain capacity allocation, and eventually break up Pacific National, because FCL would have provided Patrick with significant container volumes to place on Patrick's proposed new rail services.

In the event that Patrick's proposed actions in relation to Pacific National had failed to address the ACCC's competition concerns, the undertakings give the ACCC broad powers to order divestment of FCL and other Patrick assets. The undertakings also require FCL to be held separate by Patrick and Patrick is also required not to discriminate in favour of FCL over other freight forwarders.