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DP World has been cleared to proceed with its US$115m acquisition of Australian container haulage and inland depot operator Silk Logistics by competition regulators.
Earlier this year, the Australian Competition and Consumer Commission (ACCC) had decided to investigate the takeover on the grounds that by acquiring a land transport provider, DP World would be able to increase terminal prices for other container haulage firms and thus lead to “reduced competition in the supply of container transport services” across the country.
However, the ACCC today said that the takeover would not result in a substantial lessening of competition, and neither would Silk Logistics’ current competitors be treated unfairly, it judged.
“ACCC 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,” an ACCC statement said.
A recent analysis of the anti-competitive issues of the deal by Loadstar Premium suggested that DP World could give Silk Logistics vehicles priority handling at its facilities thus making its services de facto more attractive to shippers.
“By giving priority to its Silk Logistics vehicles, they will reduce productivity for other transport operators (as they wait in a queue to allow DPWA’s cranes to drop or lift containers off Silk Logistics trailers), which will have a knock-on effect as to when the shippers receive their freight.
“This not-so-subtle penalising of shippers who use other transport and warehouse operators, may force them to engage Silk Logistics just to get the levels of service they were previously receiving.
“Alternatively, DPWA could just continue to increase landside charges to non-Silk port services operators, a practice the ACCC noted in its report that all stevedores were doing, and that these fees had increased by nearly 6% compared with the previous year,” Loadstar Premium wrote.
However, ACCC commissioner Philip Williams said today: “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.”
“DP World Australia would continue to face competition from a range of established and prospective container transport providers,” Dr Williams added.
Final completion of the deal also requires approval by Australia’s Foreign Investment Review Board, and the Supreme Court of New South Wales, as well as approval from Silk Logistics shareholders.
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