The competition regulator has some concerns about Aurizon’s proposed One Rail acquisition. 

Aurizon is a major provider of rail haulage services and rail network services, describing itself as Australia’s largest rail freight operator for coal haulage and bulk rail haulage services. 

One Rail is also a provider of rail haulage and rail network services, operating on the Adelaide to Darwin corridor, as well as in NSW, Queensland and SA.

Aurizon has proposed an acquisition of One Rail combined with a divestment of One Rail’s east coast business.

“By reducing the number of competitors in the supply of coal haulage in New South Wales and Queensland from three to two and removing an important competitor to Pacific National and Aurizon, we have preliminary concerns that the proposed acquisition of One Rail by Aurizon would be likely to substantially lessen competition,” says ACCC Chair Gina Cass-Gottlieb.

The ACCC is also considering whether the proposed acquisition would substantially lessen competition in one or more regional markets for the supply of rail haulage services for bulk commodities, other than coal. 

While the parties do not currently compete in the supply of these services, Aurizon has publicly stated its intention to continue to grow its non-coal bulk commodity rail haulage business.

“We’re also considering the impact of this proposed acquisition on potential future competition in the supply of non-coal bulk rail haulage,” Ms Cass-Gottlieb said.

Aurizon has proposed a divestment undertaking that seeks to address the ACCC’s preliminary concerns. 

This undertaking proposes to divest One Rail’s east coast business, which includes its coal haulage operations in NSW and Queensland. The undertaking would allow Aurizon to sell the business either by a trade sale or demerging it as a new separate ASX-listed entity.

The ACCC has not formed a view about whether the proposed undertaking can resolve the ACCC’s preliminary competition concerns. 

“A critical issue for the ACCC is determining whether Aurizon’s divestiture undertaking will be effective in replacing the competition that would be lost because of the proposed acquisition,” Ms Cass-Gottlieb said.

To address the likely competition issues, the ACCC will need to be satisfied that any new purchaser or the demerged business would be an effective, stand-alone, long-term competitor in the supply of coal haulage and non-coal bulk commodity rail haulage. 

More details and an opportunity to provide input are accessible here.