DP WORLD plans to continue its bid to acquire Silk Logistics in spite of concerns expressed by the ACCC yesterday.
In a media statement issued on 14 March DP World acknowledged the Australian Competition and Consumer Commission’s (ACCC) statement of Issues regarding its proposed acquisition of Silk Logistics.
“The statement of issues sets out the ACCC’s preliminary views only and is not a final decision,” the statement said.
“DP World remains committed to the transaction and will continue to work together to progress ACCC and FIRB approval and all other regulatory steps required for implementation of the transaction.
“DP World believes this acquisition will deliver significant benefits to Australian supply chains, enhancing efficiency, reliability and service offerings for customers.”
The response was to ACCC concerns that DP World’s proposed acquisition of Silk could lead to higher prices and reduced quality for Australian importers and exporters.
In its statement yesterday the ACCC listed its issues of concern.
It said the acquisition could lead to discrimination against rival container transport providers by increasing charges or worsening the quality of terminal services.
“The ACCC’s preliminary view is that the proposed acquisition is likely to substantially lessen competition in the supply of container transport services by providing DP World Australia with the ability and incentive to increase charges and/or worsen the quality of terminal services provided to Silk’s rivals at each of the Ports of Melbourne, Botany (Sydney), Brisbane and Fremantle (together, the Relevant Ports),” the statement said.
“Foreclosing suppliers of container transport services is likely to result in higher prices or reduced service quality for cargo owners.
“Below-cost conditional discounts that have an exclusionary effect on rival container transport providers – post-acquisition, DP World Australia may have the ability and incentive to offer discounts that are conditional on the combined procurement of container transport services and stevedoring services by cargo owners and freight forwarders (as an ‘effective bundle’).
“Such a discount is of concern if it amounts to a below-cost offer on the container transportation portion of the effective bundle. The ACCC’s preliminary view is that a below cost conditional discounting strategy is likely to have the effect of foreclosing non-integrated
rival container transport providers from competing effectively, enabling DP World Australia to raise prices above the competitive level once the competitive constraint provided by rival container transport providers has been removed.”
The ACCC also raised an issue it said may raise concerns about access to commercially sensitive information.
“The ACCC understands that the proposed acquisition may provide Silk access to commercially sensitive information about its rivals’ operations and customers. The ACCC considers that information on cargo owners and freight forwarders, their volumes and delivery routes may provide a competitive advantage to target or undercut rival container transport providers.
“The ACCC is also considering whether the proposed acquisition may provide DP World Australia (and its indirect parent entity, DP World Limited) access to commercially sensitive information about Silk’s customers, some of which compete with DP World Limited as freight forwarders.
“In assessing these issues, the ACCC will have regard to whether access to commercially sensitive information may facilitate coordination between the merger parties and their rivals in the container supply chain.”
The ACCC has called for submissions from interested parties to be received by 5pm on 27 March 2025.
