GrainCorp's planned $350 million sale of much of its bulk liquid storage business is stumbling after some tough findings by the Australian Competition and Consumer Commission.
The competition regulator said the sale of the eight oils, fats and fuel storage facilities to ANZ Terminals would remove a significant competitor in what was an already concentrated industry.
The ACCC now wants submissions from interested parties who may wish to comment on an issues statement it has just released before making its final decision on the sale plan by mid-October.
Sites up for sale as part of the big agribusiness' drought-forced moves to cash in some of its asset capital are at Port Kembla in NSW; Pinkenba and Hamilton in Brisbane; Largs Bay/Osborn, South Australia; Devonport, Tasmania; Port Melbourne and Laverton in Melbourne and North Fremantle in Western Australia.
The acquisition will remove a significant competitor in what is an already concentrated industry in NSW, Victoria, and SA- Rod Sims, ACCC
At the moment ANZ Terminals and GrainCorp both compete with port-side bulk storage services in NSW, Victoria and SA, where they store liquids including edible oils, tallow, non-flammable industrial chemicals and base oils for customers.
"Our preliminary view is the acquisition will remove a significant competitor in what is an already concentrated industry in NSW, Victoria, and SA," said ACCC chairman, Rod Sims.
"We are also considering the impact on competition in the east coast states more broadly, including Queensland."
He said in some locations, the acquisition would lead to ANZ Terminals being the only storage provider for some liquid products.
"This loss of competition could result in higher prices for customers, or lower levels of service," Mr Sims said.
The ACCC also noted there was limited vacant land available for lease by new storage providers at the ports, which would restrict potential new competitors.
"Even where land may be available, it is highly uncertain any new entrants would emerge in the bulk liquids sector to challenge ANZ Terminals," Mr Sims said.
ANZ Terminals is committed to obtaining the necessary regulatory approvals and satisfying other conditions to enable its proposed acquisition to go ahead- ANZ Terminals statement
Melbourne-based ANZ Terminals is owned by an infrastructure investment group whose primary backers include prominent regional livestock selling centre and airport asset owner, Palisade Investment Partners, and Colonial First State's asset management division, and some North American infrastructure investment funds.
To appease the competition regulator, ANZ has already agreed to divest GrainCorp's Osborne terminal after the sale, but Mr Sims said the ACCC was still considering whether this would address its concerns in SA.
"The proposed undertaking does not address the preliminary concerns we have in NSW and Victoria," he warned.
A statement by ANZ said the business was still committed to obtaining the necessary regulatory approvals and satisfying other conditions to enable its proposed acquisition to go ahead.
"ANZ Terminals acknowledges the importance of the ACCC process and continues to engage with the ACCC in its review of the proposed acquisition," it said.
ANZ already has bulk liquid storage services in Sydney, Melbourne, Geelong, and SA's Pelican Point and Osborne, specialising bulk liquid edible oils and fats, petroleum products and industrial chemicals for third party customers.
GrainCorp noted ACCC statement was only a preliminary view from the competition regulator and not its final decision.
"The company has been and will continue to work closely with the ACCC to provide the information it requires at it works through its consideration of the transaction," a GrainCorp statement said.
The bulk liquid terminal sale deal, announced in March following a wide-ranging asset portfolio review, also needs Foreign Investment Review Board approval because of ANZ's overseas investment partner involvement.
FIRB decisions are often heavily weighted by ACCC considerations.
GrainCorp said it was working productively with ANZ Terminals "towards the satisfaction of the ACCC's conditions".
The grain giant is also working towards spinning off its malt operation as an independent venture, and in the throes of searching for a new managing director and chairman to run the legacy grain storage, handling and oilseed processing business after the Maltco demerger in December.
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