Freight duo ready to battle watchdog
FREIGHT rail operators Aurizon and Pacific National have pledged to vigorously defend themselves against claims from the competition watchdog they plotted to create monopoly positions on some routes.
The Australian Competition and Consumer Commission has launched federal court action against the groups for allegedly brokering a complex deal, involving asset sales and closures, that means they would not compete against each other in the supply of some services.
It has moved to block the transaction and also sought court orders to stop Aurizon from taking any action to shut down its Queensland intermodal rail freight business, which transports goods in containers.
Aurizon, led by former Rio Tinto iron ore head Andrew Harding, has previously warned the loss-making business will be shut if the competition regulator opposes its deal with Pacific National.
“This is clearly an issue of great concern to the ACCC – we’ve done an enormous amount of work on it,” ACCC chief Rod Sims said yesterday.
The competition watchdog’s concerns centre on a deal that involves Aurizon selling its Queensland Intermodal business to a consortium made up of Pacific National, which is based in Sydney, and Melbourne-based Linfox.
Under the deal, announced in August last year, Aurizon would also sell the Acacia Ridge Intermodal Terminal south of Brisbane.
The terminal is the main facility between standard gauge rail lines in New South Wales and narrow gauge lines in Queensland.
Aurizon also announced it would close the Victorian and NSW parts of its Intermodal business, which it did in December. The deal is worth $225 million and Aurizon has received a non-refundable payment of $35 million.
Mr Sims said the two rivals had reached an “over-the-top agreement” whereby Aurizon would shut the Queensland Intermodal business and appoint Pacific National as the operator of the standard gauge part of the Acacia Ridge terminal if the competition regulator blocked the deal.
He said Aurizon was pushing ahead with the Pacific National deal despite the ACCC knowing of at least one party willing to buy the Queensland part of the intermodal business.
Aurizon was not willing to take up the offer – understood to be from logistics player Qube – as the deal with Pacific National was more lucrative, Mr Sims said.
“The evidence is clear to us that it was more lucrative to Aurizon to sell parts of its Intermodal business to its closest competitor and close the other parts of that business than it was to sell the whole Intermodal business to a potential new entrant,” he said.
“There are only two players doing intermodal rail freight in Queensland and this would take it down to one.”
Aurizon rejected the ACCC allegations and said it would defend the proceedings.
Pacific National issued a statement saying it “refutes the allegations” and will be “vigorously defending” them.