The Australian Competition and Consumer Commission (ACCC) today announced it had identified “preliminary competition concerns” with ASX-listed Aurizon’s proposed acquisition of Flinders Ports subsidiary Flinders Logistics.
ACCC commissioner Liza Carver said the watchdog was “concerned that the proposed acquisition may substantially lessen competition in the supply of rail haulage services for the import and export of containerised bulk minerals in South Australia”.
Aurizon, through its subsidiary Aurizon Operations Limited, proposes to buy Flinders Logistics and its wholly-owned subsidiary Pirie Bulk under a share sale agreement.
Flinders Logistics operates a stevedoring and logistics business at Port Adelaide and at Port Pirie, while Pirie Bulk provides cargo handling services at Port Pirie.
Flinders Ports is one of South Australia’s top companies and was listed at number seven on the 2023 South Australian Business Index.
The ACCC pointed out that Aurizon – a national freight company – provides rail haulage services to and from Port Adelaide.
Specifically, the watchdog noted that Flinders Logistics operates at Berth 29 – “a critical berth at Port Adelaide for the import and export of certain mining products and mineral sands, and is the only berth in South Australia capable of handling these products”.
“The proposed acquisition would bring together Australia’s largest rail and freight operator with a key provider of stevedoring and port logistics services at Berth 29,” Carver said.
The ACCC said it was concerned that Aurizon would be responsible for the loading and unloading of all trains at Berth 29 if the acquisition goes through.
“This may provide Aurizon with the ability and incentive to limit the access of competing rail haulage providers to Berth 29,” the ACCC said.
“The ACCC is also concerned that the proposed acquisition may substantially lessen competition in the supply of stevedoring services for bulk commodities at Berth 29.”
Rival stevedores may be prevented for competing at Berth 29 as a result, said Carver.
“Although Aurizon would not be responsible for granting stevedoring licenses, market participants have raised concerns that this acquisition may give Aurizon the ability and incentive to prevent rival stevedores from competing at Berth 29 by restricting access to critical areas, such as hardstand and storage areas,” Carver said.
Further, the potential lessening of competition in the supply of rail haulage, stevedoring or port logistics services for bulk commodities at Berth 29 is also of concern to the ACCC: “as it could result in higher prices or lower quality services for bulk cargo customers”.
“Overall, we think this proposed acquisition could mean higher prices for bulk cargo customers in industries critical to the Australian economy,” Carver said.
In a statement, Aurizon said it would “provide a response to the statement of issues by the ACCC nominated date of 25 July, 2024”.
Flinders Ports CEO Stewart Lammin said the company would “now work in conjunction with Aurizon to provide a response to the SOI by the ACCC nominated date of 25 July 2024”.
“During this period, we will work with our staff and stakeholders to provide updates as we move through the process.”
The ACCC is set to make a decision on 26 September.