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MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  Aurizon Holdings Limited    AZJ   AU000000AZJ1

AURIZON HOLDINGS LIMITED

(AZJ)
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Aurizon : Federal Court dismisses ACCC appeal on PN Aurizon case

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05/06/2020 | 07:17am EDT

https://www.accc.gov.au

The Full Court of the Federal Court has today delivered its judgment on the ACCC's appeal in relation to proceedings brought to stop Pacific National's acquisition of the Acacia Ridge Terminal in Brisbane by Aurizon (ASX: AZJ).

The ACCC had appealed the 2019 judgment of the Federal Court which held that the acquisition would not be likely to substantially lessen competition due to an undertaking that Pacific National had offered the Court.

While the ACCC was successful in relation to a number of legal issues, the Full Court found there was insufficient evidence to establish that the acquisition was likely to result in a substantial lessening of competition, and dismissed the ACCC's appeal.

Although the majority of the Full Court agreed with the ACCC's position on the meaning of 'likely', the case hinged on the ACCC establishing the likelihood of another player seeking to enter the market in the next five to ten years. The Full Court considered that the prospect of new entry was no more than speculative.

"This was a particularly important case for Australia's merger laws, and the outcome demonstrates the real difficulty of applying the substantial lessening of competition provisions in the legislation," ACCC Chair Rod Sims said.

The result of the Full Court's decision is that Pacific National's acquisition of the Acacia Ridge Terminal may proceed, without the access undertaking accepted by the trial judge.

"This is also a sad day for the economy, because the ACCC's view is that the prospects of competition in rail freight have been significantly diminished and the impacts of this will be with us for more than a decade," Mr Sims said.

The ACCC's case was that Pacific National's ownership of the Acacia Ridge Terminal would allow it to effectively prevent access to new entrants, entrenching Pacific National's position as the dominant rail freight carrier on the east coast.

"We will now carefully consider the Full Court's judgment. The ACCC will continue to consider what changes are needed to make Australia's merger laws work in the way they need to, to safeguard the economy from highly concentrated markets," Mr Sims said.

Notes to editors

The term 'intermodal' freight is used to describe the carriage of general freight usually in a container using two or more modes of transportation, such as truck and rail. 'Intermodal rail linehaul' refers to the rail leg of the movement of intermodal freight. 'Steel rail linehaul' refers to similar services that are provided in respect of steel products.

An intermodal terminal, such as the Acacia Ridge Terminal, comprises infrastructure with a connection to a rail line where containers can be transferred between transportation modes.

Background

The ACCC commenced proceedings on 18 July 2018 alleging that 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.

The ACCC was concerned that the acquisition of the Acacia Ridge Terminal would deter a new entrant from providing interstate linehaul services in competition with Pacific National.

The ACCC had commenced a public investigation of Aurizon's proposed exit plans, including the proposed acquisitions by Pacific National of the Acacia Ridge Terminal and Queensland intermodal business on 27 October 2017. The ACCC issued a statement of issues on 15 March 2018.

The Federal Court dismissed the ACCC's proceedings on 15 May 2019. The trial judge found that, with Pacific National's undertaking offered to the Court, the acquisition of the Acacia Ridge Terminal would not be likely to substantially lessen competition.

The ACCC lodged an appeal on 27 June 2019. The appeal, and cross appeals by Pacific National and Aurizon, were heard before the Full Court of the Federal Court from 17 - 20 February 2020.

.

(C) 2020 M2 COMMUNICATIONS, source M2 PressWIRE


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Financials
Sales 2021 3 120 M 2 224 M 2 224 M
Net income 2021 490 M 349 M 349 M
Net Debt 2021 3 667 M 2 614 M 2 614 M
P/E ratio 2021 15,5x
Yield 2021 6,49%
Capitalization 7 595 M 5 410 M 5 414 M
EV / Sales 2021 3,61x
EV / Sales 2022 3,51x
Nbr of Employees 4 883
Free-Float 96,2%
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Number of Analysts 12
Average target price 5,12 AUD
Last Close Price 4,03 AUD
Spread / Highest target 43,2%
Spread / Average Target 26,9%
Spread / Lowest Target 1,74%
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NameTitle
Andrew Thomas Harding Chief Executive Officer, Director & MD
Timothy Michael Poole Chairman
George Lippiatt Chief Financial Officer & Group Executive Strategy
Russell Ronald Caplan Independent Non-Executive Director
Samantha Louise Lewis Independent Non-Executive Director
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