On 8 March 2007, the Australian Competition and Consumer Commission (ACCC) announced that it would not object to the proposed sale of Patrick Bass Strait Shipping and Tasmanian Freight Forwarding businesses to the Chas Kelly Transport Group, one of Tasmania’s major transport companies.
Toll Holdings Ltd (Toll) had agreed to divest these businesses as part of its undertakings to the ACCC in connection with Toll’s acquisition of Patrick Corporation Ltd in March 2006 (see April 2006 Competition Law Update).
The undertakings provided that the ACCC could object to a purchaser proposed by Toll of Patrick Bass Strait Shipping and Tasmanian Freight Forwarding businesses if the sale to that party was likely to result in a substantial lessening of competition in relevant markets. After scrutinising the proposed sale, the ACCC did not believe that the sale to the Chas Kelly Transport Group would be likely to result in a substantial lessening of competition.
Toll’s proposed divestiture to meet its obligations to the ACCC comes on the tail of comments by the ACCC Chairman, Graeme Samuel, indicating that the ACCC has adopted a much tougher stance in ensuring businesses comply with merger undertakings. Businesses that fail to honour commitments to the ACCC may be forced to divest key assets for as little as one dollar. Toll has escaped this fate.
Meanwhile, Toll has sought a variation to other portions of its undertakings to the ACCC, a move which has not been made any easier in the face of the ACCC’s public comments regarding its tougher stance. After extensive submissions to the ACCC, Toll has been forced to offer a revised variation, requiring Toll to complete a series of preliminary steps before the ACCC will be in a position to accept it. Toll has advised that it expects to complete the preliminary steps by 13 April 2007.
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For information regarding possible implications for your business, contact a member of the Competition & Market Regulation team.