The Australian Competition and Consumer Commission will not oppose DP World Australia Limited’s proposed acquisition of Silk Logistics Holdings Limited (ASX: SLH), the regulator announced after an extensive review.
Following detailed submissions and a statement of issues, the ACCC concluded the deal would not be likely to result in a substantial lessening of competition in container logistics and stevedoring services around Australia’s major ports.
DP World Australia operates container stevedores at the Ports of Botany (Sydney), Melbourne, Brisbane and Fremantle, and on average handles about a third of the containers processed at those ports. Silk is a national container logistics provider that hauls import and export containers by truck to and from ports where DP World operates, and also offers warehousing and distribution services from 46 facilities across five states.
The ACCC’s assessment centred on whether combining DP World’s terminal operations with Silk’s national transport and warehousing business would give the combined firm the ability or incentive to disadvantage rival container transport providers — for example by raising their costs or restricting their access to DP World terminals.
ACCC analysis found DP World Australia was unlikely to engage in discriminatory conduct that would cause material operational delays or disruption at its terminals. The regulator noted that any reduction in DP World’s ability to efficiently process containers would risk the company losing shipping lines to competing terminals and thus harm its own business.
“Although DP World Australia may be able to engage in subtle forms of discrimination without adversely affecting its primary function as a container terminal, such conduct is unlikely to reach a level so as to substantially lessen competition,” ACCC Commissioner Dr Philip Williams said.
“DP World Australia would continue to face competition from a range of established and prospective container transport providers.”
The ACCC said it will continue to monitor Australia’s container freight industry, tracking prices, costs and profits of container terminals, gathering industry information and producing an annual monitoring report for government.
Background supplied by the regulator notes that, in addition to stevedoring, DP World Australia operates empty container parks around Brisbane, Melbourne and Botany, holds a 50 per cent interest in a vehicle booking system used by container transport providers at several ports, and runs a limited fleet of container transport trucks in Melbourne and Sydney. DP World Australia is an indirect subsidiary of DP World Limited, which also provides freight forwarding and contract logistics services in Australia.
Silk’s operations are split into port logistics — road transport of import and export containers and related services such as fumigation and quarantine inspections — and contract logistics, which covers warehousing, palletising, storage and distribution from its national network.
The ACCC’s public register contains further information on the review of the proposed transaction.
