PN not opposed to rail takeover

RAIL group Pacific National has announced it will inform the Australian Competition and Consumer Commission that it will not oppose the Queensland Rail joint venture's $1.3 billion acquisition of Australian Railroad Group.
PN not opposed to rail takeover PN not opposed to rail takeover PN not opposed to rail takeover PN not opposed to rail takeover PN not opposed to rail takeover


Staff Reporter

QR and investment group Babcock & Brown last month announced their intention to buy Perth-based ARG. The acquisition includes a 43-year lease on the rail network.

Currently, ARG is jointly owned by Wesfarmers and US-based company Genesee Wyoming.

PN said it had made a five-page submission to the ACCC that it would not oppose to acquisition but said it was concerned over diminished competition and unfair advantages that QR already receives as a government-owned entity.

According to the Herald Sun, PN regulatory general manager Tim Kuypers said the deal would see QR controlling 70% of all bulk haulage across the country.

"The acquisition means the loss of one credible player competing for any bulk haulage contracts in Qld, NSW and WA," Kuypers said.

"Effectively there will be two substantial bulk haulage train operators in Australia, QR National and PN."

Kuypers said QR was not subject to the same market disciplines as private sector entities, as it had reduced capital costs, commercial returns and limited disclosure.

"The acquisition is unlikely to have a positive impact on intrastate access matters in Queensland."

QR chief executive Bob Scheuber welcomed PN's decision not to oppose the takeover, but rejected much of the criticism.

"This acquisition means a split between above and below rail, with PN still having as much opportunity as any other bulk rail supplier to provide a competitive above rail service to clients," Scheuber said.

After the sale is completed, QR will own and operate the "above rail" haulage business, and associated infrastructure, while B&B will control the "below rail" 10,000km network of track between Perth and Cairns.

The acquisition is aimed at improving QR's competitiveness with PN by enabling it to diversify its freight operations to include more grains, alumina, bauxite, iron ore, nickel ore, woodchips and mineral sands.

The acquisition, which is expected to be signed by June, will be subject to a number of regulatory approvals, including those from the ACCC and the Foreign Investment Review Board before it is completed.