Toll sets out detailed defence of ACCC veto

<p>Toll Holdings has now filed in the Federal Court its detailed 80-page rebuttal of the Australian Competition and Consumer Commission’s veto on its takeover bid for Patrick Corp. </p> <p>The document contains Toll’s new undertakings on east-west rail, the Bass Strait and auto logistics. </p> <p>The ACCC now has until March 14 to either accept the undertakings and allow the bid to go ahead, or refuse and see the case go to a trial expected to begin in June. </p> <p>The fresh undertakings from Toll include maintaining Pacific National as a 50&#4750 joint venture and offering up all its east-west train paths for redistribution. </p> <p>But Toll specifies that any new co-owner of Pacific National cannot be another rail line-haul or forwarding operator, effectively restricting it to an investment firm which would not have the same incentive to police Toll in the market.</p> <p>The Toll document also spends just one page denying a central ACCC concern, on the impact of vertical integration on logistics, without going into any detail. </p> <p>Many analysts now believe the ACCC will reject the new undertakings and effectively send the case to trial.</p> <p>In its other detailed arguments, Toll says that SCT, QR and Freight Link are all likely to provide competition to a Toll-owned Pacific National on the east-west route.</p> <p>The company also says the barriers to entry on the east-west rail haul are not high, because developing train paths is not difficult, the capacity of the rail network is not fixed, and it can be expanded. The lead times for obtaining locos and rolling stock are not long, and there are also opportunities to access terminal facilities. </p> <p>Toll also argues there would be little sense in Pacific National using foreclosure tactics to compete on rail forwarding, because the risk of losing line-haul business with its high capital costs would not justify the gains in low margin forwarding business.</p> <br />