QUBE HOLDINGS’ proposed takeover of Wallenius Wilhelmsen’s Melbourne International RoRo & Auto Terminal has struck a hitch, with the ACCC issuing a Statement of Concerns.
There were signs of possible problems early last month when the Commission’s timeline for consideration of the takeover was paused and the planned 20 September decision postponed. The ACCC originally began work under its Informal Merger Review process in late June, after the original sale announcement was made on 27 May
At the time Qube, through subsidiary AAT, said it had entered into a binding agreement to acquire MIRRAT from WW for a total consideration of around $332.5 million (plus stamp duty and other costs) which would be funded from Qube’s available, undrawn debt facilities. The acquisition was expected to be earnings per share accretive in FY25 and meet Qube’s ROACE hurdle over the medium term, and to be completed early next year.
Today [24 October] as well as issuing the SoC the ACCC said it was seeking views on a court-enforceable undertaking offered by Qube, which it has put forward to remedy competition concerns.
MIRRAT operates the automotive/Roll-on Roll-off terminal at Webb Dock West in Melbourne. The proposed acquisition would permit Qube to acquire sole operating rights for roll-on roll-off trade through the Port of Melbourne, the Commission said.
Qube, through its wholly owned subsidiary, Australian Amalgamated Terminals Pty Ltd (AAT), operates automotive cargo terminals at the Port of Brisbane and Port Kembla, as well as a general cargo terminal at Appleton Dock at the Port of Melbourne.
Qube is Australia’s largest provider of import and export logistics services including port-related activities of terminal management, stevedoring, processing, pre-delivery inspection (PDI) and delivery.
Webb Dock West is the key facility for the processing of automotive and roll on-roll off cargo through the Port of Melbourne, according to feedback received by the ACCC.
“The proposed acquisition would result in Qube, which is one of Australia’s largest integrated terminal and freight logistics providers, owning a further interest in a critical component of the automotive delivery supply chain at the Port of Melbourne,” ACCC Commissioner Dr Philip Williams said.
“We are concerned that the proposed acquisition may have a significant effect on competition in downstream services such as automotive stevedoring and pre-delivery inspection (PDI) services.
“If this transaction goes ahead, Qube would be operating the terminal while also being in active competition with other automotive stevedores or PDI providers,” Dr Williams said.
The ACCC is concerned that Qube could raise the costs of access for rival stevedores and PDI operators, preventing them from competing effectively.
Qube could do this by restricting access to the terminal or related services, raising prices and lowering the quality of terminal services. Concerns were also raised with the ACCC that Qube would have access to rivals’ commercially sensitive information as the terminal operator.
Proposed undertaking
Qube’s proposed undertaking, which would vary the current court-enforceable undertakings in place at Port Kembla and Brisbane, would:
- require AAT to not discriminate between terminal users in favour of its own interests in the automotive supply chain by providing for certain price and non-price dispute resolution processes, ring fencing certain confidential information and report periodically on its compliance with the undertaking
- provide independent oversight (including by an independent auditor), and
- impose restrictions on AAT’s ability to introduce or change certain tariffs.
“We are now seeking feedback on both the preliminary competition concerns associated with the acquisition identified in the Statement of Issues and the proposed undertaking, which has been put forward by Qube,” Dr Williams said.
“While the ACCC has decided to publicly consult on the undertaking, this should not be interpreted to mean that this or any undertaking will ultimately be accepted.”
The Statement of Issues and proposed undertaking is available on the ACCC’s public register here: Qube Holdings Limited (Qube) – Melbourne International RoRo & Auto Terminal Pty Ltd (MIRRAT).
The ACCC invites submissions in response to the Statement of Issues by 7 November 2024.