<p>The Australian Rail Track Corporation (ARTC) has expressed significant reservations about the competition implications of a Toll-Patrick merger in a forthright submission to the Australian Competition and Consumer Commission (ACCC).</p> <p>The ARTC detailed numerous concerns it had about the far reaching effects the proposed merger would have for competition especially with regard to the Toll and Patrick jointly owned Pacific National rail business and in the provision of logistics services.</p> <p>ARTC, which controls Australia’s standard gauge interstate network and the Hunter Valley coal network, noted that Pacific National already had a dominant position in many of the rail freight markets plus ownership of key rail assets, including intermodal terminals, rollingstock, rail lands and market preferred train paths on many corridors.</p> <p>The corporation said the following about Pacific National’s dominant position on the east-west interstate market:</p> <p>"ARTC has noted a significant decline in the reliability of Pacific National’s east-west services over the last few years, as well as real price increases for many services," ARTC said.</p> <p>"ARTC would not consider such behaviour to be consistent with that of an entity operating in a contestable market."</p> <p>The ARTC told the watchdog of its concern about a similar situation developing on the north-south networks once ARTC has made the route a more competitive option to road, with its $1.4bn track upgrade and investment program.</p> <p>An even bigger concern is what will happen once the genuine competitive tension between Toll and Patrick in the joint management of Pacific National is dissolved under a merger transaction.</p> <p>"Toll could use Pacific National’s market power (through pricing and service levels, or access to key strategic facilities) to constrain competition in other parts of the transport logistics network by withholding access to rail transport or discriminatory treatment of rail services," ARTC said.</p> <p>"While this behaviour is possible under the current Pacific National ownership arrangements, ARTC considers that the Toll-Patrick transaction will increase the likelihood and focus of such behaviour by removing any competitive tension inherent in the company."</p> <p> ARTC also expressed concerns about the ports container handling market power Toll would inherit from Patrick and the effect this would have with the wider integration of those services with road and rail – in which Toll would be dominant.</p> <p>For rail and Pacific National, ARTC recommends that its concerns could be mitigated with a mixture of vertical separation and divestment of assets to other parties.</p> <p>It has also recommended a strategy of promoting, where possible within ACCC’s jurisdiction, new stevedore entry in major ports and of imposing a range of undertakings across Toll’s integrated industry assets. </p> <br />
