Monday 20th May, 2019

Acacia Ridge sale approved by Federal Court

Pacific National crane at Chullora NSW. Photo: Cameron Boggs
Pacific National crane at Chullora NSW. Photo: Cameron Boggs

Competition czar Rod Sims says he’s not satisfied with the approval of the $205 million sale of Aurizon’s Acacia Ridge intermodal terminal to Pacific National.

The Federal Court on Wednesday rejected the Australian Competition and Consumer Commission’s bid to block Aurizon from selling the Queensland terminal to its rival.

Disagreeing with the ACCC’s fears the move would reduce competition in the market, the court instead decided it was happy with an undertaking submitted by Pacific National, committing to common user access at the site.

A Pacific National spokesperson told Rail Express the Court’s acceptance of the undertaking confirmed PN’s acquisition would not lessen competition as the ACCC has alleged.

“Pacific National will operate the terminal on an open access basis in accordance with an undertaking accepted by the court which is consistent with the undertaking first offered to the ACCC by Pacific National in July 2017,” the spokesperson said.

“This judgement paves the way for Pacific National to add the Acacia Ridge terminal to its network of efficient freight terminals and to continue to provide important rail freight services for the Australian people.

“Pacific National is actively working to ensure the benefits of rail freight are considered in Australia’s growing freight task, to reduce emissions, ease traffic congestion and improve road safety.”

In submitting the sale to Federal Court review in July last year, the ACCC had alleged that both Aurizon and Pacific National had conspired to muffle potential competition in the east coast above rail market via the deal, saying Pacific National was a “more lucrative” partner for Aurizon than other potential bidders.

The ACCC later rescinded this aspect of its case, and Pacific National on Thursday morning addressed the claim.

“Pacific National is particularly pleased that baseless and reputationally-damaging claims relating to alleged understandings entered into by the company and individuals were withdrawn by the ACCC,” the company spokesperson said.

“We have continuously refuted these allegations and it is important to note that the ACCC did not proceed with these claims as any part of its final case.”

Nonetheless Sims, chair of the ACCC, said the rejection of this case by the Federal Court was unjustified.

“Aurizon may have sought to maximise its sale price by entering into these transactions with its closest competitor, Pacific National, but the transactions will create huge, likely insurmountable, barriers to new entrants who may wish to enter the markets and compete with Pacific National,” Sims said.

“The ACCC does not believe that these barriers will be addressed by the undertaking accepted by the Court.”

Sims reportedly told the AFR the case was evidence Australia’s merger laws need a re-think.

“It must be a worry to all Australians that we do not have an effective merger control regime,” Sims was quoted by the paper on Thursday. “There is nothing wrong with our legal strategy. About 85 to 90 per cent of cases we take to court are successful in cartels, competition and consumer law. But on mergers our record is lousy.

“When you are winning the cases all of the time in all other areas of the law but not in mergers, it is clear there is a problem with the merger regime in Australia.”

For Aurizon and its boss Andrew Harding, the Acacia Ridge ruling is the second big regulatory win in the last fortnight.

On May 3 Aurizon announced it had come to terms with its mining customers over an improved access deal for its Central Queensland Coal Network, effectively ending a lengthy and bitter dispute between Aurizon and the Queensland Competition Authority over the access deal.

This week, Aurizon welcomed the Federal Court decision in a short statement.

“The ACCC initiated the proceedings in the Federal Court in August 2018 when it blocked the transactions and sought penalties and orders from the court that the parties not proceed with the transactions,” Aurizon told the ASX. “Today’s decision by the Federal Court allows Aurizon to progress the $205 million sale of the terminal to PN, pending receipt of regulatory approval by the Foreign Investment Review Board.”

Aurizon said the sale would conclude its three-stage exit from its ‘loss-making’ Intermodal business, which began in December 2017 with the closure of its interstate operations, outside of Queensland.

The second stage of the exit was the sale of the Queensland Intermodal business to Linfox in January this year, for which Aurizon received $7.3 million.

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