The Australian Competition and Consumer Commission (ACCC) has raised preliminary competition concerns regarding DP World Australia’s proposed acquisition of Silk Logistics (ASX: SLH). The regulator’s Statement of Issues highlights potential risks to competition in Australia’s container transport sector.
What’s the Concern?
DP World Australia, a major container stevedore operating at Sydney (Botany), Melbourne, Brisbane, and Fremantle, currently handles around one-third of the containers processed at these ports. Silk Logistics, on the other hand, is a national door-to-door container transport provider, moving containers via truck between ports and customers.
If the deal goes ahead, DP World would own a national container transport provider, raising concerns about market dominance and reduced competition.
ACCC Commissioner Dr. Philip Williams outlined key issues:
- Potential for Higher Costs & Reduced Service Quality – DP World could increase terminal fees or worsen service quality for rival transport providers, making it harder for them to compete with Silk.
- Risk of Predatory Pricing – DP World might offer below-cost transport rates to lure customers into using Silk, squeezing out competitors before raising prices later.
- Access to Competitor Data – DP World could potentially use commercially sensitive information about Silk’s competitors in ways that distort the market.
Limited Competition Among Stevedores
The ACCC’s long-standing container stevedoring monitoring has already highlighted a lack of competition on terminal charges for transport providers. The concern is that if DP World strengthens its hold on both stevedoring and transport, it could further limit pricing and service competition in the industry.
What Happens Next?
The ACCC is inviting submissions from stakeholders until March 27, 2025 before making a final decision.
