ACCC v Pacific National Pty Limited (No 2)

[2019] FCA 669 (15 May 2019)

Note: on 26 June 2019 the ACCC lodged an appeal against the Federal Court's decision

ACCC media release on appeal

My case page for the appeal

Overview

Image: By Tjbulic (Own work) [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

Involved vertical merger - arrangements between Pacific National (and related bodies) and Aurizon (and related bodies) in relation to the 'supply of intermodal freight and bulk steel rail linehaul services to various end-users for whom transportation by road or sea was not an economically effective substitute.' (para 1).

The ACCC alleged:

'Pacific National’s acquisition of the Acacia Ridge Terminal from Aurizon would have the likely effect of substantially lessening competition in breach of section 50 of the Competition and Consumer Act 2010 (CCA).

The ACCC also alleged that a ‘terminal services subcontract’ between Pacific National and Aurizon that provided for Pacific National to conduct the day to day operations at the interstate side of the Acacia Ridge Terminal would substantially lessen competition in the interstate and Queensland intermodal rail markets in contravention of section 45 of the CCA.

The ACCC was concerned that the acquisition of the Acacia Ridge Terminal, or the existence of the long-term terminal services subcontract, would deter a new entrant from providing interstate linehaul services in competition with Pacific National.'

( ACCC media release)

Justice Beach rejected the ACCC's case relating to s 45 and s 50 (subject to accepting undertakings). Justice Beach noted that, with some hesitation, he would have accepted the ACCC's case on s 50 'but for' the undertaking.

Judgment

Justice Beach delivered his judgment on 15 May 2019: ACCC v Pacific National Pty Limited (No 2) [2019] FCA 669 (FCA page)

[Summary to follow]

Keywords

COMPETITION – acquisition involving Queensland rail terminal – Acacia Ridge Terminal including the Brisbane Multi User Terminal – access to terminal – acquisition producing vertical integration – discrimination against new entrants by vertically integrated operator – ability to discriminate – incentive to discriminate – reasonable perception of ability and incentive to discriminate – barriers to entry heightened by such acquisition – availability of alternative terminals – Brisbane Multimodal Terminal at Port of Brisbane – standard gauge terminal at Bromelton, Queensland – narrow gauge terminal at Tennyson, Queensland – Inland Rail Project – prospect of new entry – efficiencies from vertical integration – elimination of double marginalisation – intermodal and steel rail interstate linehaul services – market definition – defining market by reference to end users with no ready substitutable services for rail services – two economic conditions supporting definition by reference to end users – capacity to price discriminate amongst users – no capacity for profitable arbitrage – interstate market(s) – north-south interstate market – east-west interstate market – Queensland market – non-bulk steel – bulk steel – competition in the relevant market(s) – substantial lessening of competition – meaning of “likely” – real chance – standard of proof of counterfactual – contravention of s 50 of the Competition and Consumer Act 2010 (Cth) – undertaking proffered by the acquirer – terminal services subcontract – provisions having likely effect of substantial lessening of competition – comparison of factual and counterfactual scenarios – alternative causation case – contravention of s 45(2) of the Competition and Consumer Act 2010 (Cth)