* Commission sees opportunity to boost competition
* Questions "cosy duopoly" of Aurizon, Pacific National
* Decision expected by Dec. 15
(Adds commission comments)
MELBOURNE, Oct 6 Australia's competition
watchdog raised concerns about bids from the nation's two
biggest coal haulers for Glencore Plc's coal rail
business and said it would decide by December whether to allow
them to go ahead.
Glencore has attracted several bids for its GRail business,
the third-largest coal haulage business in Australia, which
could fetch as much as A$1.5 billion ($1.1 billion), including
from top coal hauler Aurizon Holdings, its arch rival
Pacific National and U.S. company Genesee & Wyoming Inc.
The Australian Competition and Consumer Commission said the
sale of GRail was a rare opportunity to boost competition in the
rail business in the Hunter Valley, Australia's top
"The Hunter Valley coal haulage market appears to have high
barriers to entry, so we would expect the addition of a third
competitor to have a significant effect upon the market,"
commission Chairman Rod Sims said in a statement.
The commission said market participants had raised concern
that if Aurizon or Pacific National, which is the biggest coal
hauler in the Hunter Valley, were to take over GRail, it would
lessen competition in the region.
"Market participants consider that competition in the market
would be enhanced if a third competitor entered the market by
acquiring GRail," the commission said in its statement of
It is seeking comments on how aggressively Pacific National
and Aurizon compete on price and performance, how often miners
have switched providers, and what effect Aurizon's entry into
the Hunter Valley had on Pacific National's approach to the
"Some market participants have described the level of
competition between Aurizon and PN as a 'cosy duopoly' or
similar," the commission said.
"On the other hand, feedback from some other participants
suggests that they are motivated to compete vigorously," it
The commission said the major miners in the Hunter Valley
are big and sophisticated enough to drive a hard bargain with
the rail providers and have the resources to back new haulage
providers if necessary.
"This means they are well-placed to exercise any
countervailing power that they might have in commercial
negotiations with coal haulers," it said.
($1 = 1.3141 Australian dollars)
(Reporting by Sonali Paul; Editing by Sandra Maler and Leslie