DP World Australia Cleared to Acquire Silk Logistics Holdings

The Australian antitrust regulator, Australian Competition and Consumer Commission (ACCC), on Friday said that it will not oppose DP World Australia Limited’s proposal to acquire Silk Logistics Holdings Limited.

While DP World Australia is an indirect subsidiary of DP World Limited (DPW)and provides freight forwarding and contract logistics services in Australia, Silk is a national container logistics provider in Australia. It hauls import and export containers using trucks to and from ports where DP World Australia operates. The deal was first proposed in November last year for $114.8 million.

Following an extensive investigation, including considering detailed responses to its statement of issues, the ACCC concluded that the proposed acquisition would not likely result in a substantial lessening of competition, the Commission said.

DP World Australia operates container stevedores at the Ports of Botany (Sydney), Melbourne, Brisbane and Fremantle. On average, DP World Australia services approximately a third of the containers processed at these ports.

The ACCC considered the integration of DP World Australia’s container terminals with Silk’s national container transport and warehousing business and the potential impact on container transport service providers in the supply chain.

The ACCC focussed on whether DP World Australia would have the ability and incentive to engage in discriminatory conduct against Silk’s container transport rivals by raising their costs or lowering their quality of access to DP World Australia’s terminals.

ACCC analysis indicated 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. A reduction in DP World Australia’s ability to efficiently process containers at its terminals would risk DP World Australia losing shipping lines to other terminals, damaging its own business.

ACCC Commissioner Dr Philip Williams said that although DP World Australia may be able to engage in subtle forms of discrimination without adversely affecting its primary function as a container terminal, such conduct is unlikely to reach a level so as to substantially lessen competition.

“DP World Australia would continue to face competition from a range of established and prospective container transport providers,” he said.

The ACCC has an ongoing role in monitoring Australia’s container freight industry. This involves tracking prices, costs and profits of container terminals, gathering information from the container freight industry, and providing a monitoring report to the government each year.

DP World Australia Services

DP World Australia provides port and general logistics services. Its main business is the provision of container stevedoring services and operation of container terminals at each of the Ports of Melbourne, Botany, Brisbane and Fremantle.

In addition to its stevedoring services, DP World Australia operates an empty container park in each of the areas surrounding the Ports of Brisbane, Melbourne and Botany, has a 50% interest in a vehicle booking system, that container transport providers use for the purpose of collecting and delivering containers at several Australian ports, and operates a limited fleet of container transport trucks in Melbourne and Sydney.

Silk is an ASX listed port-to-door services provider offering warehousing, distribution and port logistics services. It operates 46 facilities across New South Wales, Victoria, Queensland, South Australia and Western Australia.