The Australian Competition and Consumer Commission (ACCC) has raised concerns over freight rail transport firm Aurizon’s proposed acquisition of One Rail Australia, saying that it poses certain risks and complexities.

The regulator has highlighted what it calls ‘preliminary concerns’ regarding the deal, and is assessing whether it could reduce competition substantially.  

Last year in October, Aurizon agreed to buy rail freight operator One Rail Australia for A$2.35bn ($1.75bn). During the same time, Aurizon also announced the divestment of One Rail’s East Coast Rail via a demerger or trade sale.

The watchdog is currently seeking public comment on whether this disposal would resolve its concerns.

Both Aurizon and One Rail deliver rail haulage services for coal in New South Wales (NSW) as well as Queensland.

Pacific National, Aurizon, and One Rail are the major suppliers of coal haulage in these states.

Aurizon is said to be the largest coal haulage supplier in Queensland besides being the second largest in NSW.

ACCC Chair Gina Cass-Gottlieb said: “By reducing the number of competitors in the supply of coal haulage in New South Wales and Queensland from three to two and removing an important competitor to Pacific National and Aurizon, we have preliminary concerns that the proposed acquisition of One Rail by Aurizon would be likely to substantially lessen competition.”

The regulator is also evaluating whether the proposed acquisition would significantly lower competition in one or more regional markets for the delivery of rail haulage services for bulk commodities, in addition to coal.

At present, both the firms do not compete in the supply of these services. However, Aurizon has unveiled its plan to continue expanding its non-coal bulk commodity rail haulage operations.