THE Australian Competition and Consumer Commission is conducting an investigation into potential competition issues of Qube’s acquisition of the Newcastle Agri Terminal.
The $90-million deal, announced in early September, saw Qube acquire the bulk grain terminal from its existing shareholders CBH, Viterra Australia, Riverina and CTC Terminals.
The ACCC said Qube notified the it on 8 September and then completed the transaction on 30 September, despite requests to delay completion of the transaction after competition concerns were raised by market participants.
The ACCC said it was not provided with sufficient time or information to assess the competitive impact of the transaction.
According to the competition watchdog, the potential competition concerns that have been raised relate to the vertically integrated position that Qube will now hold in the supply chain for delivery of bulk grain to the Port of Newcastle, and the potential for Qube to engage in anti-competitive bundling of storage, handling and transport with terminal services.
A spokesperson for Qube said the company believes the transaction does not raise material competition issues, but the company would “continue to provide every assistance to the commission to allow it to complete its inquiries”.
“We are disappointed that the ACCC has chosen to continue with this inquiry,” the spokesperson said.
“Qube has worked closely and constructively with the ACCC’s grain monitoring unit over a number of years. However, the commercial arrangements between the parties did not allow for any further delay in completion of the transaction.”
ACCC chair Rod Sims said the investigation would focus on the impact of the acquisition on the supply chain for bulk grain export through the Port of Newcastle, and the ability and incentive for Qube to discriminate against rivals.
“It is worrying when a major vertically integrated player pays $90 million for key infrastructure used for the export of agricultural products without first obtaining the ACCC’s view on whether the proposed acquisition is likely to have the effect of substantially lessening competition,” Mr Sims said.
“By choosing to proceed before the ACCC had a chance to conduct its review, Qube and the former owners of the Newcastle Agri Terminal are exposed to potential legal action by the ACCC.”
The ACCC has invited submissions from market participants who may have concerns about the acquisition or wish to share information about the market.
Qube Logistics owns and operates up-country grain storage sites at Narromine and Coonamble, and supplies rail haulage in NSW. It also owns and operates the Quattro bulk grain terminal in Port Kembla, NSW.
Newcastle Agri Terminal is one of two bulk grain terminals located at the Port of Newcastle servicing export grain from farms and storage in northern NSW.
The Qube spokesperson said the acquisition of the Newcastle Agri Terminal would provides the company with geographical diversity and enhanced service capability to service traders and grain exporters in the market.
“The deal also provides an opportunity for Qube to invest in the terminal to deliver a larger and more efficient facility – providing customers in the Northern draw zone with a strong and independent competitive alternative to Graincorp’s terminal,” the spokesperson said.
The existing management team is continuing to operate the terminal.”
Potential remedies in any legal action for a breach of section 50 of the Competition and Consumer Act include an order for the shares or assets acquired to be divested or for the transaction to be declared void and unwound. The ACCC can also seek penalties in respect of a breach of section 50.
Section 50 prohibits acquisitions that would have the effect, or be likely to have the effect, of substantially lessening competition in any market.
