Bid blocked: ACCC wants Toll and Patrick to compete

<p>The Australian Competition and Consumer Commission has comprehensively knocked back Toll Holdings’s $4bn takeover offer for Patrick Corp.</p> <p>The ACCC said that the undertakings offered by Toll were not considered "nearly sufficient" to deal with the competition issues concerned. </p> <p>This was despite Toll’s apparent confidence that it would persuade the ACCC after 17 earlier merger approvals.</p> <p>The commission specifically rejected Toll undertakings on east-west rail rolling stock and train paths, and on asset sales on the Bass Strait and auto logistics. </p> <p>But it also made it clear it had concerns over wider vertical integration issues in terminals and inland transport and terminals. </p> <p>The ACCC said that it while the transport industry is moving towards greater integration, "the ACCC is concerned that this acquisition will prevent Toll and Patrick from developing their own separate integrated systems in strong competition".</p> <p>It said that the combined group would control significant rail and wharf "bottleneck" infrastructure to shut out rival transport and forwarding operators. </p> <p>The ACCC had been indicating questions about vertical integration of logistics and terminal operations well before Toll proposed last August to add Patrick’s terminals to its even larger inland transport and logistics operations. </p> <p>Analysts had also strongly questioned how the ACCC could logically approve a Toll takeover of Patrick after the concerns it raised earlier on a Patrick takeover of FCL.</p> <p>Patrick says that it will now re-enter talks with the ACCC to allow it to takeover FCL.</p> <p>During its fight against the Toll bid, Patrick had promoted the Patrick&#47FCL merger plan as its own, more competitive model of vertical integration for investors to buy into. </p> <p>If Toll does not now promise to drop the bid, then the ACCC will start a case in the Federal Court. This could prove a more favourable forum for Toll to win approval.</p> <p>Patrick managing director Chris Corrigan said that the Toll bid "has been a failure of strategy and execution".</p> <p>Toll put out a three-line statement saying that "it is considering its options" in light of the ACCC’s decision.</p> <br />