Tuesday 12th Nov, 2019

Aurizon sells Queensland Intermodal to Linfox; ACCC won’t oppose

Linfox railed containers. Photo: Linfox
Photo: Linfox

The Australian Competition & Consumer Commission (ACCC) will not block the sale of Aurizon’s Queensland Intermodal business to logistics firm Linfox.

Aurizon on Friday announced it would sell its Queensland Intermodal business to Linfox for $7.3 million.

Aurizon’s initial plans were to sell the business to a partnership of Pacific National and Linfox, but the ACCC blocked that sale in July.

On Friday, ACCC chair Rod Sims said the sale of the business to Linfox alone would not be challenged by the competition watchdog, as it did not believe it will reduce competition.

“Linfox’s operations in Queensland are relatively limited, and the transaction will mean there will remain two intermodal rail line-haul providers in Queensland, which is a good outcome for rail competition and Queenslanders,” Sims said.

Linfox will acquire freight forwarding and pick-up-and-delivery assets, rail wagons, customer contracts, and terminal access in the move.

Aurizon and Linfox also announced a separate 10-year take-or-pay deal between Linfox and Aurizon’s Bulk business, which will provide rail linehaul services and some terminal services to Linfox using Aurizon locomotives and employees.

Roughly 190 existing Aurizon employees will move to Linfox.

Linfox executive chairman Peter Fox said the company was proud to be making a strategic investment in Australia.

“This significant acquisition will strengthen the Linfox network and increase competition in the Queensland logistics market,” Fox said.

“It will also bring certainty to Aurizon staff, regional communities and customers that would have been impacted if the Aurizon [Queensland Intermodal] business had closed.”

Linfox Logistics chief executive Mark Mazurek said the company aimed to provide a “new and compelling” option for businesses moving freight in and out of North Queensland.

“We understand the strategic importance of this region and the entry of Linfox with our safe, secure and compliant logistics services will unlock significant value for our current and future customers,” Mazurek said.

Aurizon had previously announced that it would shut the Queensland intermodal business if it couldn’t progress the earlier transaction proposal involving Pacific National.

Aurizon to press on with Acacia Ridge sale

Friday’s deal came more than a year after Aurizon said it would sell the business to a partnership of Linfox and Aurizon’s primary competitor, Pacific National.

The ACCC launched court action over the sale in July this year.

The ACCC’s case, which is before the Federal Court, alleges Aurizon and Pacific National conspired to stifle new entrants into the local intermodal rail market when they agreed to the sale.

Aurizon says it will continue to push for the other half of that deal, which is the $205 million sale of its Acacia Ridge intermodal terminal to Pacific National.

“Aurizon and Pacific National will continue to seek clearance of the $205 million sale of the Acacia Ridge terminal through the Federal Court proceedings scheduled to be heard on 19 November 2018,” Aurizon said on Friday.

The sale of Queensland Intermodal to Linfox is subject to the Federal Court lifting an interlocutory injunction it placed on Aurizon when the ACCC brought its case.

The ACCC compelled the court to grant the injunction after Aurizon said it would close the business if its initial sale plan was blocked.

“The ACCC did not consider that Aurizon’s shut-down plans were rational given there were other options,” Sims said on Friday.

“The sale of the Queensland intermodal business demonstrates why the ACCC must always question claims that businesses will be shut if we don’t approve a merger.”

ACCC chairman Rod Sims in July alleged Aurizon had alternatives to selling to Pacific National “that would have been more competitive”.

“The ACCC is aware of at least one alternative purchaser that is willing and able to acquire Aurizon’s entire remaining intermodal business,” Sims said.

Aurizon on Friday said Linfox was “the only standalone, binding bid” for the Queensland Intermodal business.

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