SYDNEY, AUSTRALIA — The Australian Competition and Consumer Commission (ACCC) released on May 26 a statement of issues on the proposed acquisition of Asciano by Qube Holdings Ltd, Brookfield Infrastructure Partners LP and a group of global private equity and pension funds.

The ACCC commenced its review of the proposed acquisition on March 30.

“The ACCC has received a very large number of submissions from industry stakeholders expressing a broad range of concerns about the proposed acquisition,” Rod Sims, ACCC chairman said. “Market participants have expressed concerns about the vertical integration of Patrick container terminals with the two largest landside import-export container logistics providers in Australia, Qube and ACFS. The ACCC considers this to be a significantly greater degree of vertical integration than the current situation where Patrick is vertically integrated with only ACFS.”

Brookfield Infrastructure, based in Canada, and Qube, an Australian logistics group, announced on Feb. 23 they were considering joining their rival bids for the Australian-based rail company, Asciano Limited.

The discussions remained preliminary, indicative and non-binding and there was no agreement, arrangement or understanding between the parties at that stage, however, under the new proposal, Asciano shareholders would receive all cash consideration of A$9.28 ($6.71) per share for a deal valued at A$9 billion ($6.5 billion).

This is the latest in the ongoing eight-month takeover battle for the Australian port and rail operator. Brookfield first approached Asciano in July 2015, offering A$9.05 per share in cash and stock. Qube made a rival bid in November 2015, offering A$9.25 per share.

“The ACCC is concerned that Patrick container terminals may provide preferential access to Qube and ACFS vehicles, and Qube regional export trains running into Port Botany, and raise rivals’ costs,” said Sims. “Qube and Brookfield will each own 50% of Patrick container terminals, and may have parallel incentives to favor their landside logistics operations.” 

“There are also concerns regarding foreclosure of rival stevedores,” he said. “Market participants have suggested that if Patrick gives favorable treatment to the container logistics operations of both Qube and ACFS, then Qube and ACFS may provide a superior service offering to importers and exporters on condition that they use shipping lines calling at Patrick container terminals. This may lessen competition in stevedoring.”

In addition, the ACCC is considering whether stevedoring and empty container park services will be bundled together, in a way that forecloses rival stevedores.

The ACCC has consulted extensively with industry participants including importer/exporters, shipping lines, stevedores, road and rail logistics providers, governments, freight forwarders, port authorities, empty container park operators and industry bodies. Stakeholders throughout the import/export container supply chain have expressed concerns about the proposed acquisition.

“The ACCC is now seeking additional feedback from interested parties on the likelihood of competition being lessened in container landside logistics at each port, the provision of regional rail container export services into Port Botany, and stevedoring,” Sims said.

The ACCC invites further submissions from industry participants in response to the statement of issues by June 10. The ACCC expects to announce its final decision on July 21.

Specific details regarding Asciano, each of the consortium parties and the structure of the proposed acquisition, is available on the public register.