ACCC seeks to take Acacia Ridge sale to High Court

The Australian Competition & Consumer Commission (ACCC) has sought leave to appeal to the High Court Pacific National’s purchase of Aurizon’s Acacia Ridge Terminal.

In May, the Full Federal Court, on appeal, found that the sale would not substantially lessen competition in the rail freight sector.

If the ACCC’s appeal is successful, it will be the first time that the High Court has heard a case with Australia’s merger laws.

Pacific National has criticised the ACCC’s pursual of the case, which had been heard and ruled upon twice at the Federal Court level.

“Pacific National was looking forward to completing the transaction and adding the Acacia Ridge Terminal to its network of efficient freight terminals, and this will once again be delayed while the ACCC seeks to further appeal what Pacific National considered was a comprehensive and correct decision by the Federal Court,” said a Pacific National spokesperson.

Aurizon has said in a statement that it would continue to operate the Acacia Ridge terminal and expected the leave application to be heard and decided before the end of 2020.

The ACCC has been pursuing the case as it sees the case as a test of Australia’s merger laws. In addition, the ACCC is attempting to seek a finding as to whether a court can accept an undertaking after finding a proposed acquisition is anti-competitive.

“We are seeking special leave to appeal to the High Court because it is vital for Australian businesses and consumers that competition laws are effective in protecting the competitive process,” said Simms.

Pacific National had offered to make an access undertaking which the Federal Court had initially accepted. On appeal the Full Federal Court found that the undertaking was not needed.

Simms said that the Full Federal Court’s decision did not recognise the impact of Pacific National’s purchase of the Acacia Ridge terminal.

“We believe that the Full Federal Court’s decision does not recognise the full impact of the proposed acquisition on competition in this vitally important industry.”

Federal Court dismisses ACCC appeal against sale of Acacia Ridge terminal

The Federal Court of Australia has upheld the acquisition of the Acacia Ridge intermodal terminal by Pacific National.

In a judgement delivered on May 6, the Full Court of the Federal Court dismissed an appeal by the Australian Competition and Consumer Commission (ACCC) against the sale of the terminal by Aurizon to Pacific National and upheld Pacific National’s cross appeal.

The appeal is the latest in a long-running legal process since the $205 million sale was announced in 2017. After the sale was announced, the ACCC blocked the sale and commenced legal action to prevent Pacific National from purchasing the terminal. A Federal Court challenge in July 2018 led to the Court dismissing the ACCC’s challenge. Subsequently, the ACCC appealed to the Full Court of the Federal Court.

The Federal Court has now found that the sale does not breach the Competition and Consumer Act. In addition, the court found that the undertaking that Pacific National agreed to, that would increase competition, was unneeded. In a statement, Pacific National welcomed the court’s decision.

“Pacific National welcomes today’s judgment and is looking forward to adding the Acacia Ridge Terminal (south of Brisbane) to its nationwide network of efficient rail freight depots, terminals and hubs.”

Aurizon also welcomed the court’s findings.

“Aurizon welcomes the certainty delivered by the Court today – for our business, our employees and our shareholders. It is almost three years since the sale of the Terminal was announced in August 2017 and two years since the ACCC initiated proceedings in the Federal Court in July 2018,” the company said in a statement.

ACCC chair Rod Simms said that the case would be looked at for what effect it has on mergers in Australia.

“We will now carefully consider the Full Court’s judgment. The ACCC will continue to consider what changes are needed to make Australia’s merger laws work in the way they need to, to safeguard the economy from highly concentrated markets.”

In the earlier Federal Court proceedings, Pacific National had unconditionally offered to not discriminate in providing access to other rail operators. The ACCC rejected this undertaking, however the court found in 2019 that the offered undertaking would have the effect of enabling competition. The ACCC had then appealed the decision based on the Court’s acceptance of the undertaking.

“Pacific National is actively working to ensure the many social, environmental and economic benefits of rail freight are realised throughout Australia’s transport supply chain, including the future Melbourne to Brisbane Inland Rail,” said Pacific National in a statement.

Alstom driverless trains decision overturned by Federal court

Alstom Transport Australia has won a decision in the Federal court allowing it to import driverless trains free of tariffs.

On March 17, the Federal Court of Australia overturned a decision by the Administrative Appeals Tribunal (AAT) that a driverless train can be put to the same use as a driver operated train.

The Federal court hearing took place on 24 February. The court ordered that the appeal by Alstom be allowed and the matter be remitted to the Tribunal for re-determination according to law. This allows Alstom to avoid the tariff of five per cent on rollingstock imported into Australia.

The AAT had affirmed a decision made by the Comptroller-General of Customs to refuse an application made by Alstom for a Tariff Concession Order (TCO).

A TCO can be sought by a company which wishes to import a product where there are no substitutable goods  manufactured in Australia. Alstom sought the TCO to covered driverless trains with seven further specifications.

Alstom said that as the use of the imported goods was “to transport passengers on a high capacity, high frequency, driverless metropolitan train line system”, there was not a substitutable product manufactured in Australia.

Customs and the AAT said Alstom’s use of the substitutable goods was too specific and the AAT held that driver operated versus driverless trains was an issue of how the use was performed, as the tribunal found that the relevant use was transportation of passengers by train.

The Full Federal Court disagreed with the finding of the AAT, writing that the AAT merely identified the use of a “passenger train”. 

Russell Wiese, customs and global trade partner at Hunt & Hunt Lawyers said Alstom sought a TCO over a particular type of passenger train.

“In this case, it was not just any train over which a TCO was sought. It was a driverless train with 7 further specifications,” Wiese said.

“As the AAT took too wide an approach, the matter has been sent back to the AAT to be reheard.”

The Court made note of the fact that Customs had screened the TCO application and did not reject the wording as being too specific.

Alstom was approached for comment but declined as the matter is ongoing.

Pacific National, Aurizon critical of ACCC appeal in Acacia Ridge case

Aurizon and Pacific National have criticised the competition watchdog’s decision to extend its “expensive and reputationally damaging” campaign against the agreed sale of the Acacia Ridge intermodal terminal in Queensland.

The Australian Competition and Consumer Commission (ACCC) on June 27 said it would appeal the Federal Court’s rejection of its case against Aurizon selling Acacia Ridge to Pacific National.

Aurizon and Pacific National have been trying to finalise the deal since August 2017, when they announced PN would team up with Linfox to acquire Acacia Ridge and Aurizon’s Queensland Intermodal above rail business.

Initial opposition from the ACCC led to a split in that sale, with Aurizon selling Queensland Intermodal to Linfox, and PN to acquire Acacia Ridge.

An unsatisfied ACCC pressed on, however, taking its challenge of the Acacia Ridge sale to the Federal Court in July last year.

At that time the ACCC not only challenged the sale on competition grounds, but went so far as to make the pernicious accusation that PN and Aurizon had conspired to limit competition in the Australian rail market with the deal.

The ACCC dropped this component of its case before the court’s ruling, but was still unsuccessful with its competition claims, with the Federal Court approving the sale on May 15. The Court told the ACCC the competition issues it had raised were resolved with an unconditional access undertaking presented to the court by Pacific National.

Now the ACCC has announced it will again try to block the sale with an appeal of that Federal Court decision.

“This court action by the ACCC has been an expensive and reputationally damaging exercise,” a PN spokesperson told Rail Express on June 27.

Pacific National believes the Federal Court judgement created a pro-competitive outcome for freight in Australia by guaranteeing access for new entrants to get freight from road to rail. It’s important to remember the undertakings we’ve committed to did not previously exist at Acacia Ridge Terminal and any assertion that we would somehow subtly work to discriminate against other users is simply wrong.”

Aurizon responded to the news of the ACCC’s appeal through an ASX statement.

“The ACCC is asserting they believe the Court made an error in accepting an access undertaking in relation to use of the terminal,” Aurizon said. “Aurizon does not accept this assertion and is of the view this matter was fully considered by the Federal Court and the decision handed down in May 2019 was clear and comprehensive.”

If the appeal is granted, Aurizon said the Acacia Ridge sale will have to wait until the case is finalised by the Full Bench of the Federal Court, a process which could take several months.

The ACCC said its appeal would focus on the court’s involvement in the access undertaking itself.

“Among other things, we will argue that the court made an error by accepting the undertaking, and then using it as a relevant fact when determining whether there was likely to be a substantial lessening of competition,” ACCC chairman Rod Sims said.

“This appeal is crucial to Australia’s merger regime because acceptance of undertakings of this kind by the Court means that anti-competitive mergers could be approved, and this has the potential to damage the Australian economy.”