ACCC Stymies Aurizon Rail Sale

By Glenn Dyer | More Articles by Glenn Dyer

Trouble for rail group Aurizon’s planned sale of its Queensland intermodal business with the competition regulator revealing severe reservations about the plan to sell it to Pacific National.

The ACCC said on Thursday the planned sale would give Pacific National a lock on freight haulage within Queensland.

The Commission’s announcement and comments by chair Rod Sims indicates Aurizon will struggle to get the deal approved. Aurizon seemingly agrees with that assessment because it issued a statement later on Thursday warning of job losses if the deal doesn’t go through.

That is always the standard reaction from business to potential or actual opposition to these types of deals from the ACC

But from what Mr Sims said in the Commission’s statement yesterday it is hard to see the sale to Pacific National being approved.

Mr Sims says the proposed sale to a consortium of Pacific National and Linfox would make Pacific National the only operator of its kind to and from far north Queensland.

"We are concerned the proposed acquisitions would lead to increased prices and reduced service for freight hauled between Brisbane and far north Queensland," Mr Sims said in a statement of issues released on Thursday.

He says the ACCC is concerned about Pacific National’s proposal to acquire the Acacia Ridge terminal in a $220 million deal because of the power that would give the buyer against any potential freight rival.

Although freight services company SCT Logistics will remain on interstate rail routes, it is vertically integrated with freight forwarding and does not generally haul many containers for other freight forwarders.

The ACCC has received extensive feedback from interested parties who say there is no close alternative to rail for many types of freight, particularly to and from far north Queensland.

Pacific National has offered an undertaking that it would not discriminate in providing access to the Acacia Ridge Terminal if the acquisition went ahead.

The ACCC says it is consulting on the proposed undertaking as part of the Statement of Issues consultation.

“The ACCC’s preliminary view is that a section 87B undertaking won’t resolve the concerns arising from the dominant provider of intermodal rail linehaul services nationally also owning the Acacia Ridge Terminal,” Mr Sims said in yesterday’s statement.

In its statement on Thursday, Aurizon reiterated that it would close the Queensland Intermodal business if the sale is blocked.

“Any closure of the business would likely occur by the end of 2018 and would result in the loss of up to 350 jobs throughout Brisbane and regional Queensland," Aurizon said.

“Closure would also be likely to affect rail services and rail line haul capacity in Queensland, potentially causing disruption to freight import and export supply chains."

Aurizon wants to exit the container freight business to increase its focus on its growing coal division, and said it remained committed to finalising the deals by July.

In a brief backgrounder, the ACCC said "Pacific National is the largest provider of intermodal rail freight services in Australia. Currently, Pacific National and Aurizon are the only providers of intermodal rail freight services within Queensland. Aurizon previously also competed with Pacific National and SCT on interstate routes.”

"The interstate rail network is a standard gauge rail track, while the rail network north of Brisbane is narrow gauge and requires specific locomotives and wagons.

"The Acacia Ridge Terminal has both a standard gauge terminal (supporting interstate transport), which was used by both Pacific National and Aurizon, and a narrow gauge terminal (supporting transport within Queensland) used only by Aurizon. Pacific National’s Queensland rail operations currently use a separate terminal at Tennyson, which is owned and operated by Pacific National.”

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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