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Australia: Watchdog raises concerns on bids for Glencore coal rail arm

 |  October 6, 2016

Rail giants Aurizon and Pacific National remain in the hunt for Glencore’s GRail coal haulage network in the Hunter Valley, but competition watchdog Rod Sims has warned allowing one of them to win the auction could stifle competition in the sector in the future.

The Australian Competition and Consumer Commission released a statement of issues on Thursday morning and placed an “amber” warning light on the bids by Aurizon and Pacific National for the Glencore haulage business, which is said to be worth around $1 billion.

The US-based Genesee & Wyoming, which operates the Glencore rail assets, is also bidding in partnership with Macquarie Infrastructure and Real Assets.

The watchdog said that while allowing Pacific National (the largest coal hauler in the Hunter with around 60 per cent of the market) and Aurizon (which has about 25 per cent of the market) to buy GRail would enshrine the “status quo” in terms of competition, it would also make it very difficult for a third player to enter the market in the future, given the high barriers to entry in the sector.

Mr Sims denied that the ACCC was attempting to dictate how the market should operate and said the commission needed to examine two future “worlds” – one where the market was reduced to two players, and one where there were three.

Full Content: Financial Review

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