The Australian Competition and Consumer Commission (ACCC) has released a statement of issues on alternative proposals on the purchase of Glencore Coal’s rail business, GRail, by Aurizon and Pacific National.
Glencore Coal is selling GRail through a competitive bidding process.
Currently, the ACCC is reviewing proposals against the alternative scenario of a new party entering the market with the acquisition.
ACCC Chairman Rod Sims said: “The Hunter Valley coal haulage market appears to have high barriers to entry, so we would expect the addition of a third competitor to have a significant effect upon the market.
"This has been supported by market feedback. In contrast, an acquisition by Aurizon or Pacific National would essentially be a continuation of the status quo where there are two active players in the Hunter Valley coal haulage market.”
Although there are some examples of coal producers acquiring their own rolling stock, Glencore Coal is the only Hunter Valley coal producer to have done so for a majority of its coal haulage requirements.
Sims added: “Glencore is now selling that rolling stock along with a long-term haulage contract. Coupled with the fact that Glencore Coal is the largest coal producer in the Hunter Valley, this is a platform for entry that is unlikely to be replicated in the foreseeable future.
“However, the ACCC also recognises that coal producers are generally well-resourced, sophisticated parties that may be able to protect their own interests, even if Aurizon or Pacific National acquires GRail.
"We are going to be exploring their ability to leverage competition between Aurizon and Pacific National or to bypass both haulage providers by acquiring their own rolling stock or by sponsoring new entry.”
ACCC has called for responses to the Statement of Issues by 21 October.
Its provisional date to take a final decision is 15 December.