28 May 2019

Pacific National/Aurizon – Australian Federal Court approves merger, subject to condition

The Australian Federal Court has dismissed the ACCC’s proceedings that related to the acquisition by Pacific National, a rail operator, of the Acacia Ridge Terminal in Brisbane, from Aurizon.  The ACCC had raised concerns that Pacific National’s acquisition of the Acacia Ridge Terminal would have deterred a new entrant from providing interstate linehaul services in competition with Pacific National, and that a ‘terminal services subcontract’ that provided for Pacific National to conduct the day to day operations on the interstate side of the Acacia Ridge Terminal would harm competition in interstate and Queensland intermodal rail markets.  An RBB team led by George Siolis considered the profitability and sustainability of one of the rail services previously operated by Aurizon, which had used the terminal.  During the trial in the Federal Court, RBB economist Patrick Smith testified a hot tub, in regard to the relevant market definitions, and the likelihood that the transaction would give rise to anti-competitive vertical input foreclosure.  Justice Beach rejected the ACCC's case on each concern, subject to access undertakings, and cited this evidence in the final decision, noting that: “I propose to proceed largely adopting the above economic framework as expounded by Mr Smith.” and “I found him to be highly skilled and very thorough in his written and oral evidence”.  RBB was instructed by Clayton Utz, and Ashurst, solicitors acting for Pacific National and Aurizon, respectively.

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