News / Opposition to ACCC green light for DP World takeover of Silk Logistics

Photo: DP World Australia

Australian shippers and forwarders have reacted with disappointment to the country’s competition regulators giving the green light to DP World Australia’s takeover of container haulage firm Silk Logistics.

The Australian Competition & Consumer Commission (ACCC) last week concluded that the acquisition would “not result in a substantial lessening of competition”.

However, representatives of the country’s forwarders, shippers, and haulage industry have criticised the decision, suggesting the ACCC may have inadvertently allowed the terminal operator to provide its new subsidiary with preferential treatment, by failing to introduce “any enforceable undertakings”.

Haulage association Container Transport Alliance Australia (CTAA) and shipper body the Freight Transport Alliance (FTA) both raised concerns about the ACCC statement that said: “While DP World Australia may have the ability to engage in some subtle forms of discrimination, such as proving Silk will priority access to booking slots or deprioritising access or service levels for Silk’s rivals, DP World Australia’s incentive to engage in discriminatory conduct is limited, due to the impact of such conduct on terminal efficiency.”

The CTAA interpreted that to mean that “DP World Australia may engage in preferential terminal access treatment for Silk transport assets, such as favourable VBS [vehicle booking systems] slot treatment and other access preferences”, and added: “But even if they do, the ACCC is of the view that ‘it is unlikely to reach a level so as to substantially lessen competition’.

“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.

“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,” the CTAA concluded.

This view was supported by the FTA, which has consistently opposed the takeover on the grounds that VBS slot prioritisation, discounted terminal access charges, restricted access to inland container depots, and preferential access to pick-up and drop-off windows could all lead to a loss of hinterland transport options for Australian importers and exporters.

“Despite our strong opposition, some industry bodies chose to soften the stance, suggesting an undertaking would be sufficient,” said FTA director Paul Zalai. “This lack of a united industry front may have given the regulator an excuse to sidestep the issue.

“Even though it acknowledged the deal would reduce competition, it failed to act. The result? A green light for stevedores and global shipping lines to push ahead with their vertical integration ambitions,” Mr Zalai added.

The CTAA explained that terminal access could be used as a way to promote Silk’s road transport services against its competitors.

“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,” it said.

Loadstar Premium recently ran an in-depth analysis of the competitive aspects of the deal.

While it has received ACCC competition clearance, the takeover “remains subject to the satisfaction of certain conditions precedent, including approval by the Foreign Investment Review Board and receipt of the requisite approvals from Silk shareholders and the Supreme Court of New South Wales”, said a Silk statement to the Australian Stock Exchange on Friday.