AusRAIL, Market Sectors

Transport users will pay for ACCC’s mistakes, says Corrigan

<p>The Australian Competition and Consumer Commission "fiddled while Rome burned" in spending a year blocking Patrick Corp’s merger with FCL Transport Services, while letting Toll Holdings take over Patrick, outgoing Patrick managing director Chris Corrigan said yesterday (Thursday, May 11).</p> <p>Mr Corrigan said that it was Australia’s transport users who would end up paying for the $3bn premium that the market had put on synergies in the Toll-Patrick merger. </p> <p>"Looked at clinically, the Toll-Patrick business is being valued at $3bn more than the sum of its parts the $3bn is what investment bankers quaintly call synergies."</p> <p>These were not cost-cutting synergies "but revenue synergies the revenue you can extract from lack of competition", Mr Corrigan said.</p> <p>"Transport and logistics consumers are going to pay higher costs in the future to put a value of $3bn on the merger &#8211 and the ACCC let them do it. </p> <p>"If the ACCC were a rock band, they would be called Flim Flam and the Flakes."</p> <p>Mr Corrigan noted, however, that for new Toll shareholders it was "wonderful news no wonder the market is roaring ahead". </p> <p>Mr Corrigan later said: "The mockery of the ACCC position was that they fiddled around for a year with us and FCL. Fiddling while Rome burned and Toll took over Patrick.</p> <p>"Here was a company [in Patrick&#93 that wanted to spend $165m to compete with Toll. </p> <p>"While the ACCC gave us buckets of pseudo-economic and legal mumbo-jumbo to stop us taking FCL, in the meantime they rolled over on Toll acquiring Patrick. </p> <p>"It was absurd in the extreme."</p> <p>Mr Corrigan said that there was an almost total reliance by the ACCC on the sale of the half share in Pacific National. </p> <p>"That this might change the competitive landscape given the unbelievable dominance of Toll-Patrick strikes me as bizarre," he said. </p> <p>He was scathing of QR’s chances of being a competitive brake on Toll and Pacific National, describing them as "bureaucrats who run a coal monopoly in Queensland". </p> <p>Mr Corrigan also said that Toll chief Paul Little could have saved "a lot of heartache and a lot of angst" if he had accepted Patrick chairman Peter Scanlon’s original suggestion in friendly talks at the end of 2004 of "nothing under $8 a share", rather than the $9.16 which Toll was paying now. </p> <p>"It was a bargain at $8 in that sense, this epic battle was necessitated by a misjudgement of the value of our business," he said. </p> <p>Patrick’s directors all resigned last night and Toll yesterday announced a review of Patrick’s operations, which was likely to take some months. </p> <p>Mr Little said when the Toll bid was launched last August that Toll would look at Patrick’s $425m capital spending program on its terminals. </p> <p>An interim management structure will also be put in place for Patrick.</p> <p> Mr Little said that Toll had held discussions with key Patrick operational executives and did not envisage any significant changes to Patrick management’s current responsibilities.</p> <p>He also acknowledged Patrick’s interim net after tax profits of $118m, up 10% on last year. </p> <p>"The fact that the Patrick business is in such good shape confirms Toll’s strategic objective to secure these assets with strong operational management," Mr Little said.</p> <br />