ACCC fails to overturn Pacific National rail freight terminal ruling
ACCC’s attempt to overturn Pacific National’s $200m bid to buy a key Queensland freight terminal killed off by the Federal Court.
The competition watchdog has failed in its effort to overturn Pacific National’s $200m bid to acquire a key freight terminal from rival rail hauler Aurizon, with the Federal Court again backing the sale of the Acacia Ridge terminal on Wednesday.
The Australian Competition and Consumer Commission was appealing a May 2019 decision by Justice Jonathan Beach to allow the sale of Acacia Ridge, despite the objections of the ACCC.
ACCC chairman Rod Sims had described the appeal as “crucial to Australia’s merger regime”, arguing that Pacific National’s acquisition of the Acacia Ridge Terminal would substantially lessen competition by raising the barriers to entry for potential new rail operators.
The terminal is currently the only point in Queensland where goods can be transferred from NSW’s standard gauge rail to Queensland’s narrow gauge track, or to road haulage.
The deal, first announced in late 2017, sparked a legal intervention from the competition watchdog, which argued that the sale would give Pacific National an effective monopoly on railing freight into northern Queensland.
In his original decision, Justice Beach said he may have accepted the ACCC’s argument that Pacific National’s ownership of the terminal could have the effect of reducing competition in Queensland’s freight industry had it not been for a voluntary undertaking offered by Pacific National on the last day of court hearings, giving guarantees around access and pricing for third-party users.
The ACCC’s appeal argued Justice Beach did not have the power to accept such an undertaking, and should not have done so even if the power existed.
But the Federal Court of Appeal dismissed the ACCC appeal on Wednesday and went further, ruling the acquisition would not have breached competition laws even without the voluntary undertaking and saying that Pacific National can be released from its voluntary undertaking.
While parties for all sides are still studying the decision, it represents another setback to the ACCC’s campaign to reign in consolidation of Australia’s key infrastructure assets — a key issue for Mr Sims, who has regularly criticised the impact of the sale of monopoly infrastructure assets, such as ports and airports, on consumers and businesses which rely on their services.
Mr Sims said: “This was a particularly important case for Australia’s merger laws, and the outcome demonstrates the real difficulty of applying the substantial lessening of competition provisions in the legislation.
“This is also a sad day for the economy, because the ACCC’s view is that the prospects of competition in rail freight have been significantly diminished and the impacts of this will be with us for more than a decade.”
Meanwhile, a spokesman for Pacific National said the company welcomed the decision.
“The Full Court of the Federal Court of Australia today confirmed Pacific National’s acquisition of Aurizon’s Acacia Ridge Terminal can proceed by confirming that the acquisition will not contravene Section 50 of the Competition and Consumer Act even without the access undertaking voluntarily offered to the Australian Competition and Consumer Commission (ACCC) and the court by Pacific National,” he said.
“Pacific National welcomes today’s judgment and is looking forward to adding the Acacia Ridge Terminal to its nationwide network of efficient rail freight depots, terminals and hubs.”
The company is still considering the implications of the decision, and has not yet commented on whether it will seek release from the undertakings.
Aurizon also welcomed the decision, saying it would consider the detail of the decision before deciding its next steps.
“Following today’s decision, Aurizon is now able to progress the $205m sale of the terminal to Pacific National, pending final approval by the Foreign Investment Review Board,” the company said.
“The sale includes a non-refundable payment of $35m already received by Aurizon. The balance of $170m is payable to Aurizon on transaction completion.”
Aurizon shares closed down 6c, or 1.3 per cent, on Wednesday at $4.55.
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