Australian regulator sees antitrust concerns on Brookfield Asciano buyout

Wed Oct 14, 2015 6:56pm EDT
 
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SYDNEY Oct 15 (Reuters) - Australia's competition regulator said a proposed A$8.9 billion ($6.50 billion) takeover by Canada's Brookfield Asset Management of local port and rail freight firm Asciano Ltd may hurt competition for other coal haulage operators.

In a statement on Thursday, the Australian Competition and Consumer Commission said the deal, the biggest purchase of a domestic firm by an overseas entity since 2011, would give Brookfield both the rail network and train operations in certain locations.

"The ACCC is concerned that the vertical integration will lead to a substantial lessening of competition in related markets for the supply of above rail haulage services in (Western Australia) and Queensland," commission chairman Rod Sims said, referring to coal haulage networks in two of the country's eight states.

The statement suggests that, while Brookfield and Asciano may be required to make changes to the deal or give regulatory undertakings, the ACCC is unlikely to block it in its entirety. Asciano has rail freight operations in every Australian state and stevedoring operations in 40 locations.

Sims said the ACCC regulates rail freight access arrangements but noted that "where the owner of such infrastructure vertically integrates with one of a very limited number of users of the infrastructure, then the ACCC considers that an access regime may not be capable of averting a substantial lessening of competition".

Asciano's former parent company, Toll Holdings, agreed to a A$6.5 billion takeover by Japan Post Holdings earlier this year, while larger rail freight provider Aurizon Holdings has been seen as a potential takeover target.

Asciano's shares have traded below Brookfield's offer price since it first disclosed the Canadian company's approach in July. On Wednesday, the target's shares rose 2 cents to A$8.53, below the offer price of A$9.15.

The ACCC said it expects to give a final ruling by Dec. 17. ($1 = 1.3691 Australian dollars) (Reporting by Byron Kaye; Editing by Andrew Hay)