FTA, CTAA rue Silk decision

THE FREIGHT & Trade Alliance, which opposed DP World Australia’s acquisition of Silk Logistics, have been quick to condemn today’s ACCC approval of the deal as setting a dangerous precedent. 

Container Transport Alliance Australia has also queried the decision to allow the acquisition to proceed without any enforceable undertakings. This is despite the ACCC acknowledging that DP World may engage in some forms of discrimination against other container transport operators.

“Despite our strong opposition to the merger, some industry bodies chose to soften the stance, suggesting an undertaking would be sufficient,” FTA/APSA’s Paul Zalai told DCN.  

“This lack of a united industry front may have given the regulator an excuse to sidestep the issue. Even though it acknowledged the deal would reduce competition, it failed to act.  

“The result? A green light for stevedores and global shipping lines to push ahead with their vertical integration ambitions. This decision sends a dangerous signal — that market dominance is negotiable, and regulatory intervention is optional.” 

In two detailed submissions, FTA/APSA claimed that these risks aren't theoretical — they’re already playing out in the marketplace, “and this merger only turbocharges them”.  

“DP World may argue this integration will deliver efficiencies and streamlined services, but in reality, it risks driving out smaller and mid-sized operators, reducing choice and innovation, and ultimately inflating costs for shippers and Australian consumers,” Mr Zalai said. 

Regulatory reform now more urgent than ever, he said. 

FTA and APSA reiterated their call for decisive government action, including:

• Regulating slot allocation and empty container park access to ensure fair treatment.
• Implementing safeguards against misuse of sensitive commercial data.
• Enforcing a mandatory code of conduct to regulate stevedore charges and prevent vertical price distortions, as recommended by both the Productivity Commission and ACCC.
• Strengthening oversight to guarantee competitive neutrality in all supply chain activities. 

CTAA’s Neil Chambers said there seemed to be a fundamental misunderstanding by the ACCC of how the container chain really works. 

The conclusion of the ACCC is that DP World Australia is “unlikely to engage in forms of discriminatory conduct which would lead to material operational delays and disruption at DP World’s Terminals.” 

“We’d suggest that the above is a statement of the self-evident - neither DP World nor container transport operators want to experience operational delays and disruption caused by any operational behaviours. 

“What’s interesting however is the subsequent statements that “while DP World Australia may have the ability to engage in some subtle forms of discrimination, such as providing Silk will priority access to booking slots or deprioritising access or service levels for Silk’s rivals, DP World Australia’s incentive to engage in discriminatory conduct is limited due to the impact of such conduct on terminal efficiency.” 

“CTAA interprets that statement and other statements in the decision to mean that DP World Australia may engage in preferential Terminal access treatment for Silk transport assets, such as favourable VBS slot treatment and other access preferences, but even if they do, the ACCC is of the view that “it is unlikely to reach a level so as to substantially lessen competition.” 

“The ACCC’s statement seems to suggest that DP World’s National Terminal Carrier Access Terms and Conditions may not necessarily be applied to Silk’s transport assets in the same manner as for other carriers after the acquisition and vertical integration of the Silk’s operations into DP World Australia. 

“It is really hoped that this is not the case,” Mr Chambers said.  “We await any further advice from the ACCC on its decision to not impose any enforceable conditions on the acquisition, or any statements from DP World Australia about its future operational intentions post the acquisition. 

“The ACCC’s decision seems to belie the reality that any preferential Terminal access could be used as a commercial tool to differentiate landside pricing and service levels beyond the Terminal gate. 

“Preferential terminal access treatment may provide a commercial advantage in the provision of container road transport services without impacting on Terminal efficiency but may very much impact on the ability of other road transport operators to compete on price and service levels for landside logistics operations,” CTAA said. 

DPWA had not responded to an invitation to comment on the ACCC’s decision at time of writing.