Brookfield’s plans for an Asciano takeover have suffered another blow, with the Australian Competition and Consumer Commission rejecting undertakings offered by the Canadian entity in response to competition concerns.
The ACCC this week confirmed widespread media reports that Brookfield had offered a number of proposed moves it could make to assuage concerns raised by the ACCC over potential vertical integration, should Brookfield successfully acquire Asciano and its subsidiaries, Pacific National and Patrick.
Although the ACCC says it has not yet formed a final view on whether to oppose the proposed acquisition, the regulator said it would be inappropriate to conduct industry consultation on so-called “behavioural-undertakings”.
“While the ACCC does not generally make public its decision whether or not to consult on proposed undertakings, we considered it important… in light of the recent media reports that Brookfield has proposed long-term behavioural undertakings to the ACCC,” chairman Rod Sims said.
“The undertakings seek to address potential issues arising from the vertical integration of above and below rail assets in West Australia and the integration of port and rail assets in Queensland.
“After detailed consideration, the ACCC has concluded that the undertakings are not acceptable, and accordingly we will not be conducting third party consultation on the undertakings.”
In deciding the undertakings were unacceptable, the ACCC considered several factors including:
- Whether long term section 87B undertakings could address the scale and complexity of vertical integration of Brookfield’s monopoly infrastructure assets with Asciano’s rail operations;
- The difficulty and risks of behavioural undertaking obligations;
- Whether it was appropriate for the proposed undertakings to rely (partially), on Western Australian and Queensland based access regimes which are subject to change and have been criticised for their lack of effectiveness in dealing with vertical integration issues.
“The ACCC’s review of the proposed acquisition continues and we are assessing the large volume of submissions from industry participants and the parties,” Sims said.
The ACCC is expected to announce a final decision on Thursday December 17, having begun a review of the proposed acquisition in October.
If approved, Brookfield would be allowed to acquire Asciano, including its Pacific National above rail business.
Brookfield already owns network owner Brookfield Rail in Western Australia, and Dalrymple Bay Coal Terminal near Mackay in central Queensland – two assets the ACCC has taken issue with potentially combining with Pacific National.
This story originally appeared in Rail Express affiliate Lloyd’s List Australia.