Competition in Australia market surges following the acquisition of Aurizon Holdings acquisition over One Rail Australia. The proposal of this acquisition comprises $1.69bn. ACCC (the Australian Competition and Consumer Commission) is overseeing public comments towards market competition concerns. But the most important concern despite public comment is whether this acquisition could lead Aurizon to outstand its competitors.
Aurizon acquisition also covers the new entity’s debt levels. This would affect the firm’s ability as a merged company and as the best competitor. So far, there are only three giant competitors in the coal industry in New South Wales and Queensland. They are Pacific National, Aurizon and One Rail. Among these firms, Aurizon is the biggest coal supplier in Queensland but it is the second-biggest supplier in New South Wales. One Rail, on the other hand, sits in the third place in New South Wales and works pretty well recently in Queensland.
ACCC chair, Gina Cass-Gottlieb, argued that it would somehow endanger market competition. Because when Aurizon and One Rail merged, there would be only a competition between two giants. It is like removing a competitor from Pacific National as well as Aurizon. So, one acquisition of One Rail could lessen the substantial competition. ACCC argued that any new purchaser would be an effective long-term competition.
In October last year, it agreed to purchase One Rail Australia which was previously known as Genesee and Wyoming Australia. The acquisition was from Macquarie Asset Management for around A$2.35BN. It borrows A$1.45bn through its three-tranche loan in order to win the acquisition. However, business in both New South Wales, and Queensland for One Rail gained only small loans.
