THE Australian Competition and Consumer Commission has outlined preliminary competition concerns in relation to a proposed merger between container handling equipment companies Cargotec and Konecranes.
In Australia, Cargotec’s Kalmar business and Konecranes’ Port Solutions business supply heavy equipment such as cranes, straddle carriers and reach stackers that move shipping containers to and from ships, trains and trucks. Their main customers are stevedores and other container handling companies.
ACCC chair Rod Sims said the market feedback the commission has received is that Cargotec and Konecranes are the only proven suppliers in Australia of straddle carriers used at terminals.
“If Cargotec and Konecranes merge, the only potential alternative for customers will be ZPMC, which has never secured sales in Australia,” Mr Sims said.
The ACCC is concerned that Cargotec’s merger with Konecranes would also result in significant consolidation in the supply of gantry cranes, which are a type of overhead crane on rails or wheels.
“While Konecranes’ Australian customer base for gantry cranes is currently small, we received feedback that they are one of the only alternatives to Cargotec for customers in Australia,” Mr Sims said.
“The barriers to entry in the container handling equipment market are high, as the machinery and software is very sophisticated and suppliers have to invest significant time and resources to develop their equipment and demonstrate that it will work well over a long life.”
The ACCC is also considering the proposed merger’s effect on the supply of mobile container-handling equipment in Australia, and repair and maintenance services.
“The merged entity would become the largest supplier of mobile container handling equipment in Australia, and we will further consider the extent to which other competitors including Hyster, Clark Equipment and Sany would competitively constrain Cargotec and Konecranes post-merger,” Mr Sims said.
“We understand that Cargotec and Konecranes currently supply some critical inputs like diagnostics equipment and proprietary spare parts, which allow their customers to do their own maintenance or get maintenance services from a third party.”
“Currently, Cargotec’s customers would be able to switch to Konecranes’ equipment if Cargotec attempted to withhold these critical inputs. We are investigating whether the merged entity would be able to successfully withhold these inputs to force customers to obtain maintenance services from them,” Mr Sims said.
The ACCC has invited submissions from interested parties in response to the statement of issues by 19 November 2021. The ACCC’s final decision is scheduled for 17 February 2022.
Cargotec and Konecranes announced their respective boards had signed an agreement to merge in October 2020.
Both Cargotec and Konecranes are Finnish publicly listed suppliers of material handling systems, including container-handling equipment and services; engineering services for the maritime industry; and systems for the general manufacturing and processing industries.
In Australia, Konecranes’ Port Solutions business sells container-handling equipment and terminal systems, including manual and automated straddle and shuttle carriers.
