Watchdog hearing Toll's first big test

By PAM GRAHAM

The bold expansion into New Zealand by Australian logistics company Toll Holdings faces its first serious test by competition watchdog, the Commerce Commission, today.

Toll has a rail monopoly with an attached road and Cook Strait shipping business after taking over Tranz Rail.

It is now trying to put port stevedoring businesses into a joint venture with Port of Tauranga's marshalling business Owens Cargo.

Marshallers handle goods to the ship's hook, while stevedores move goods from hook to the hold.

The decision by the commission, extended four times, is eagerly awaited, as a test of the limits of the Australian invasion.

Owens Cargo chief Mark Cairns said Carter Holt Harvey and Ports of Auckland opposed the joint venture but log exporter Silva supported the proposal.

The crux, as with many competition decisions, is in how the market is defined.

Cairns said the joint venture did not reduce competition because it put different kinds of businesses together.

It was a vertical integration. Other countries did not distinguish between marshalling and stevedoring, and there would be efficiencies from putting the two together.

Those opposed argued that the rail operator should not own port businesses because it could favour one port over another in the pricing of rail.

"It's a nice deal to have for the port, but they are not too worried if it doesn't come off," said James Lindsay of ABN Amro.

"I've got no idea which way it will go."

The plan is to form a new joint venture company which would acquire Port of Tauranga's Owens Cargo Company, Toll Logistics New Zealand and Leonard and Dingley.

Leonard and Dingley is a stevedore at Ports of Auckland and the other Toll businesses were bought from BHP before Toll bought 84 per cent of Tranz Rail. Tranz Rail is now called Toll NZ.

Toll Holdings owns ports and shipping businesses in Australia and half a joint-venture rail business Pacific National. Concern about the power one company can exert over a logistics chain has also been raised in Australia.