Under the proposal QR will take ownership and operation responsibilities for the above-rail business (rail haulage) and associated infrastructure in Western Australia and for two contracted services in the eastern states: the Melbourne to Adelaide line and one in New South Wales.
Babcock & Brown will own and operate the below-rail business of a 10,000km network of track between Perth and Cairns.
The acquisition includes a 43-year lease from the Western Australian Government on the rail network.
ACCC chairman Graeme Samuel said the $1.3 billion acquisition of ARG was approved because competition between the companies was limited and likely to remain that way even after the acquisition takes place.
“QR operates a bulk-freight business in Queensland and proposes to acquire ARG’s Western Australian bulk-freight business. Despite some attempts, QR has never before won a bulk-freight tender in WA and ARG has never won a bulk-freight tender in Queensland,” Samuel said.
“There is limited evidence that bulk-freight customers directly play QR and ARG off against each other in the tender process, particularly in recent years.”
Samuel said evidence of continued competition from Pacific National, possible competition from new players for some bulk-freight contracts and the ability of larger customers to provide their own bulk freight, in the event of a price increase, had led the ACCC to approve the transaction.
The acquisition is aimed at improving QR's competitiveness with PN by enabling it to diversify its freight operations to include more grains, alumina, bauxite, iron ore, nickel ore, woodchips and mineral sands.
Samuel said the ACCC would issue a public competition assessment on the matter in due course.
The acquisition is expected to be signed by June.
