After 11 months the $9 billion plus battle to take control of ports and rail operator, Asciano is now in the home straight following yesterday’s greenlight for the deal from the ACCC, the country’s competition watchdog.
The Australian Competition and Consumer Commission said in a restructure of the joint takeover by local logistics firm Qube, Canadian infrastructure giant Brookfield and six global investment funds had addressed any concerns it had.
“After careful consideration, the ACCC has concluded there is not likely to be a substantial lessening of competition in any market,” ACCC chairman Rod Sims said in the statement released well before trading started on the ASX yesterday.
The ACCC’s investigation focused on the import-export supply chain for containerised freight through the ports of Botany, Brisbane, Fremantle and Melbourne.
Specifically, the Commission said it took a close look at the vertical integration of Asciano’s Patrick container terminals with Qube’s road and rail container transport services and empty container parks, especially the freight company, ACFS.
“The ACCC conducted extensive inquiries with a large number of industry participants. A broad range of issues were raised across different aspects of the supply chain,” the Commission said yesterday.
“After careful consideration, the ACCC has concluded there is not likely to be a substantial lessening of competition in any market,” Mr Sims said in the ACCC statement yesterday.
The ACCC revealed some competition concerns in a Statement of Issues it released in May, but the parties have since restructured the proposed acquisition so that ACFS will no longer be vertically aligned with Patrick.
“This restructure resolved a number of the ACCC’s concerns,” Mr 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 problems with ACFS were solved by Qube and Brookfield selling it back to the Tzaneros family who were in the original joint venture with Qube.
The ACCC also 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 particular regard to Qube’s interest in the Moorebank intermodal terminal.
The ACCC aid it 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 favour of Qube trains at Port Botany.
“These constraints include 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 said in the statement it 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.
The ACCC said it considered NSW Ports has an incentive to limit any discrimination by Patrick Container Terminals in favour of Qube’s interests.
“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,” Mr Sims said.
The takeover consortium is made up of the members of two previously competing groups for Asciano. They are: Qube Holdings Limited, Global Infrastructure Management, Canada Pension Plan Investment Board, CIC Capital Corporation, Brookfield Infrastructure Partners Limited, GIC Private Limited, British Columbia Investment Management Corporation, and Qatar Investment Authority.
Chris Corrigan, chairman of Qube, was the managing director of the Patrick Corporation, which essentially owned Asciano’s Patrick containers terminals, until it was taken over in 2006 by Toill, which later split into two companies – Toll and Asciano.
The Patrick Container Terminals Business will go into a 50-50 joint venture with Qube and Brookfield Infrastructure. Qube shares rose 3.9% to $2.44 yesterday as investors gave the news a big tick.
