THE Australian Competition and Consumer Commission (ACCC) is inviting submissions from market participants who have concerns about Qube Logistics’ recent purchase of the Newcastle Agri Terminal (NAT).
This is despite the purchase of the grain terminal being completed on September 30.
ACCC today announced it would conduct an investigation into potential competition issues arising from purchase of NAT, one of two export grain terminals in Newcastle.
As the investigation relates to a completed acquisition, it will be conducted on an enforcement basis.
Qube on September 8 notified the ACCC of its intent to purchase NAT.
ACCC said Qube did not heed requests to delay completion of the transaction after competition concerns were raised by market participants.
The ACCC said it was not provided with sufficient time or information to assess the competitive impact of the transaction.
Potential competition concerns which have been raised with the ACCC relate to the vertically integrated position that Qube will now hold in the supply chain for delivery of bulk grain to the Port of Newcastle, and the potential for Qube to engage in anti-competitive bundling of storage, handling and transport with terminal services.
“Our investigation will focus on the impact of the acquisition on the supply chain for bulk-grain export through the Port of Newcastle, and the ability and incentive for Qube to discriminate against rivals,” ACCC chair Rod Sims said.
“It is worrying when a major vertically integrated player pays $90 million for key infrastructure used for the export of agricultural products without first obtaining the ACCC’s view on whether the proposed acquisition is likely to have the effect of substantially lessening competition.”
“By choosing to proceed before the ACCC had a chance to conduct its review, Qube and the former owners of the Newcastle Agri Terminal are exposed to potential legal action by the ACCC.”
The ACCC is also inviting submissions from those who wish to share information about THE market.
Qube already owns and operates up-country grain storage sites at Narromine and Coonamble, and supplies rail haulage in NSW.
It also owns and operates the Quattro bulk grain terminal in Port Kembla, NSW.
Newcastle and Port Kembla are NSW’s only two bulk grain export points, and both have two grain terminals, one owned by Qube and the other by GrainCorp.
Potential remedies in any legal action for a breach of section 50 of the Competition and Consumer Act by the ACCC include an order for the shares or assets acquired to be divested, or for the transaction to be declared void and unwound.
The ACCC can also seek penalties in respect of a breach of section 50.
As this matter is now a merger law enforcement investigation of a completed acquisition, the ACCC will not publish an indicative timeline for the investigation on the ACCC’s public mergers register.
In considering the proposed acquisition, the ACCC applies the legal test set out in section 50 of the Competition and Consumer Act. In general terms, section 50 prohibits acquisitions that would have the effect, or be likely to have the effect, of substantially lessening competition in any market.
NAT sets new record
NAT posted a record month in September by exporting more than 200,000 tonnes, to beat the previous monthly record of 155,000t set in May.
Included in the September tonnage was the largest grain load in Newcastle history, the Pan Ceres, a Panamax which is now sailing to Sri Lanka with 64,518t of wheat on board on behalf of customer Arrow Commodities.
NAT’s joint CEOs are Jock Carter and Martin MacKay. Mr MacKay said NAT was on track to export 1.5 million tonnes (Mt) of grain this season in what has been a bumper year for grain exports.
“We anticipate a record in excess of 3Mt will be exported from Newcastle across both export terminals for the season, which is the highest on record.”
“These are numbers we never thought possible.”
Mr Carter and Mr MacKay are upbeat about the future of NAT under Qube ownership.
“We are confident that they will continue to invest in, and improve the competitiveness of, the terminal for the benefit of the whole supply chain and we look forward to continue working with them in what looks like another promising season ahead,” Mr MacKay said.
“We are delighted the new owners are looking to retain the current team and continue to grow the business,” Mr Carter said.
Source: ACCC, NAT