The Australian Competition and Consumer Commission (ACCC) will not oppose DP World’s proposed acquisition of Silk Logistics Holdings.
Following an extensive investigation, including considering detailed responses to its statement of issues, the ACCC found that the proposed acquisition would “not likely” result in a substantial lessening of competition.
DP World Australia operates container stevedores at the Ports of Botany (Sydney), Melbourne, Brisbane and Fremantle. On average, DP World Australia services approximately a third of the containers processed at these ports.
Silk is a national container logistics provider in Australia. It hauls import and export containers to and from ports where DP World Australia operates.
The ACCC said it considered the integration of DP World Australia’s container terminals with Silk’s national container transport and warehousing business and the potential impact on container transport service providers in the supply chain.
In its investigation, the ACCC said it focussed on whether DP World Australia would have the ability and incentive to engage in discriminatory conduct against Silk’s container transport rivals by raising their costs or lowering their quality of access to DP World Australia’s terminals.
ACCC said its analysis indicated that DP World Australia is unlikely to engage in forms of discriminatory conduct which would lead to material operational delays and disruption at DP World’s terminals.
A reduction in DP World Australia’s ability to efficiently process containers at its terminals would risk DP World Australia losing shipping lines to other terminals, damaging its own business, the ACCC added.
“Although DP World Australia may be able to engage in subtle forms of discrimination without adversely affecting its primary function as a container terminal, such conduct is unlikely to reach a level so as to substantially lessen competition,” ACCC Commissioner Dr Philip Williams said.
“DP World Australia would continue to face competition from a range of established and prospective container transport providers.”
Container Transport Alliance Australia Director Neil Chambers said the decision does raise some concerns for the peak body.
“The ACCC’s statement seems to suggest that DP World’s National Terminal Carrier Access Terms and Conditions may not necessarily be applied to Silk’s transport assets in the same manner as for other carriers after the acquisition and vertical integration of the Silk’s operations into DP World Australia,” Chambers said.
“It is really hoped that this is not the case. We await any further advice from the ACCC on its decision to not impose any enforceable conditions on the acquisition, or any statements from DP World Australia about its future operational intentions post the acquisition.
Chambers said the ACCC’s decision seems to belie the reality that any preferential terminal access could be used as a commercial tool to differentiate landside pricing and service levels beyond the terminal gate.
“Preferential terminal access treatment may provide a commercial advantage in the provision of container road transport services without impacting on terminal efficiency, but may very much impact on the ability of other road transport operators to compete on price and service levels for landside logistics operations.”