Antitrust Law Daily Wrap Up, ACQUISITIONS AND MERGERS NEWS: Australian competition authority clears Asciano’s acquisition by Qube, Brookfield, (Jul 25, 2016)

By Linda O’Brien, J.D., LL.M.

The Australian Competition and Consumer Commission (ACCC) will not oppose the proposed acquisition of Asciano Limited by a consortium comprising Qube Holdings Ltd, Brookfield Infrastructure Partners LP, and a group of global investment funds, the ACCC has announced.

Asciano is an Australian freight logistics company. Qube Holdings, also of Australia, is diversified logistics and infrastructure company. Headquartered Bermuda, Brookfield’s business consists of the ownership and operation of premier utilities, transport, energy, and communications infrastructure assets in North and South America, Australia, and Europe.

The ACCC’s investigation focused on the import-export supply chain for containerized freight through the ports of Botany, Brisbane, Fremantle, and Melbourne. Specifically, the ACCC closely considered the vertical integration of Asciano’s Patrick container terminals with Qube’s road and rail container transport services and empty container parks. The ACCC expressed some competition concerns in a Statement of Issues it released in May, but the parties have since restructured the proposed acquisition so that ACFS [NOTE: ACFS NOT EXPLAINED] will no longer be vertically aligned with Patrick.

The ACCC closely considered whether the vertical integration of the Patrick container terminal at Port Botany with Qube’s NSW rail operations would result in discrimination against Qube’s competitors. A key issue was whether this would reduce competition in the market for rail-based container transport services from regional NSW to Port Botany, with regard to Qube’s interest in the Moorebank intermodal terminal.

"The ACCC conducted extensive inquiries with a large number of industry participants," said ACCC Chairman Rod Sims. "A broad range of issues were raised across different aspects of the supply chain. After careful consideration, the ACCC has concluded there is not likely to be a substantial lessening of competition in any market."

The ACCC conducted in-depth inquiries with a broad range of Port Botany stakeholders and identified several constraints on the ability and incentive of Patrick to discriminate in favor of Qube trains at Port Botany. Those constraints included the potential loss of business to rival stevedores, Brookfield and others having a 50 per cent interest in Patrick, and the regulation of rail services. The ACCC also considered the role of NSW Ports as the lessor of the Patrick Container Terminal site, particularly given it is also the landlord of intermodal terminals at Enfield and Cooks River. NSW Ports had an incentive to limit any discrimination by Patrick Container Terminals in favor of Qube’s interests.

"This restructure resolved a number of the ACCC’s concerns," Sims said. "It means that the effect of the proposed acquisition is a substitution of Qube for ACFS as the downstream container logistics provider linked to Patrick. The combined strength of these constraints has led us to conclude that the acquisition would not cause an increase in prices or a reduction in the quality of regional rail container export services to Port Botany."

Companies: Asciano Limited; Qube Holdings Ltd.; Brookfield Infrastructure Partners LP

News: AcquisitionsMergers Antitrust