Friday, July 10, 2015

Marine Freight and Logistics Suppliers Told Cargo Company Acquisition is Anti-Competitive

Toll - Sea Swift Deal Knocked Back by Authorities
Shipping News Feature

AUSTRALIA – The Australian Competition and Consumer Commission (ACCC) has decided to oppose the proposed acquisition of the Northern Territory and far north Queensland marine freight business, Toll Marine Logistics Australia, by Cairns based project cargo and ocean shipping service provider, Sea Swift, saying that it would be likely to substantially lessen competition. Explaining the reasoning behind the decision, ACCC Commissioner Roger Featherston said:

“Sea Swift and Toll Marine are the two largest suppliers of marine freight services in the Northern Territory and far north of Queensland and, on many routes, are the only two suppliers of scheduled freight services. Over the last two years, they have been engaged in a price war with each other.

“During this price war, Toll has agreed to sell its business to Sea Swift for a substantial amount of money, and a 20% shareholding in Sea Swift. Not only would this merger eliminate the competition between them, it would also increase the barriers to entry or expansion for other freight providers.

“The proposed transaction strengthens Sea Swift’s position and power in these markets and denies other freight suppliers the opportunity of expanding as a consequence of any exit by Toll. As far as the ACCC is aware, Toll did not offer its business on the market or look for any other potential acquirer of the business, or of any of the assets used in its business.

“As Sea Swift is the party with the most to gain from an end to the price war, and Toll’s exit from these markets, it is not surprising that Toll considered Sea Swift would pay the highest price for the business, but the ACCC has to consider the effects upon competition, not the commercial benefits to the party selling the assets.”

The ACCC had previously expressed its preliminary view that the proposed acquisition was likely to substantially lessen competition. In an attempt to address this concern the parties offered undertakings to the ACCC, which the Commission considered, but decided that the pair were incapable of addressing the competition concerns.