Re: Rail Sale Games

["Andrew Honan" <ahonan@zipworld.com.au>]

"Maurie Daly" <mauried@tpg.com.au> wrote in message
3b15e12a.18979950@can-news.tpg.com.au">news:3b15e12a.18979950@can-news.tpg.com.au...
> On Thu, 31 May 2001 13:08:17 +1000, "Tezza"
> <tezza2000@dingoblue.net.au> wrote:
>
> >"Adam Dunning" <adamdunning@start.com.au> wrote in message
> >3b14da38$1@news.alphalink.com.au">news:3b14da38$1@news.alphalink.com.au...
> >| Another article from Truck & Bus Tranportation (not Marinus this time
> >| though!)
> >|
> >| pg 9, Jully 2001 issue (current)
> >|
> >| 'Rail sale games'
> >| A split has developed between NSW and the federal government on the
sale
> >of
> >| FreightCorp and the National Rail Corporation (NR).
> >|
> >| After agreeing last year to a parallel sale of the two companies, the
> >| Federal Government in now being asked to sell the railways jointly -
> >| virtually as a asingle entity.
> >
> >As recommended by the Union forced inquirey.
>
> Can anyone with some knowledge of corporate law comment on the
> legality of this, ie selling two totally separate corporations as the
> one entity.
> It also seems to be a mechanism to defeat a ACCC investigation as to
> whether a single owner of both Rail Operators would be anti
> competetive .
>
I admit I am not an expert in corporate law, but I suspect there would be
nothing to stop the joint sale in 'Corporate' law terms (as per Corporations
legislation and administered by ASIC). I think you refer to the Trade
Practices Act dealing with market power and anti-competitive forces (as
administered by ACCC).
I would say that the ACCC would take the line that the Productivity
Commission took in terms of non-bulk rail freight competing 'for' the market
rather than 'in' the market. ie non-bulk freight on say SYD-MLB-BRIS legs is
currently dominated by road. Therefore packaging up NRC and FreightCorp on
non-bulk would not substantially lessen competition (of non-bulk line haul
freight).
In terms of bulk freight, I am not aware of NRC competing in the same
commodity and same geographical area as FreightCorp. (It would seem
illogical that the NSW Govt would permit this to happen given that it owns
FreightCorp and is am equity holder of NRC).
The interesting point however is that bulk freight (particularly coal) is a
natural monopoly for rail. That is, road cannot compete. There may be a case
for another rail operator for coal haulage.
Irrespective of this, and given that NRC does not operate on Hunter coal (as
far as I know), there is no lessen of competition.

AH


> Under the scenerio of separate sales , its extremely unlikely that the
> ACCC would allow the buyer of NRC to also buy Freightcorp and vice
> versa , but if they are both sold as a single sale then there is
> nothing to investigate.
>
> Also what happens to the existing staff , and their working conditions
> if a single sale occurrs ?
> Are NRC crews and Freightcorp crews pay and conditions the same ?
>
> MD
>
> >
> >
> >| That move is being strongly resisted by the federal transport
department
> >and
> >| its minister, John Anderson, on the grounds that selling NR seperately
> >will
> >| maximise its sale price.
> >|
> >| "Because FreightCorp loses so much money, if we sold them together it
> >would
> >| mean that NR would be subsidising FreightCorp," a spokesman for
Anderson
> >| said.
> >|
> >| The Federal government also believed that selling both railways to a
> >single
> >| buyer would raise questions about whether the resulting company's size
> >| provided it with an unfair competitive advantage.
> >
> >Negated by the subsidisation?
> >
> >
> >
> >
> >
>