The ACCC has outlined preliminary competition concerns in relation to a proposed merger between container handling equipment companies Cargotec and Konecranes, in a statement of issues published today.
In Australia, Cargotec's Kalmar business and Konecranes' Port Solutions business supply heavy equipment such as cranes, straddle carriers and reach stackers that move shipping containers to and from ships, trains and trucks. Their main customers are stevedores and other container handling companies.
"The market feedback we've received is that Cargotec and Konecranes are the only proven suppliers in Australia of straddle carriers used at terminals," ACCC Chair Rod Sims said.
"If Cargotec and Konecranes merge, the only potential alternative for customers will be ZPMC, which has never secured sales in Australia."
The ACCC is concerned that Cargotec's merger with Konecranes would also result in significant consolidation in the supply of gantry cranes, which are a type of overhead crane on rails or wheels.
"While Konecranes' Australian customer base for gantry cranes is currently small, we received feedback that they are one of the only alternatives to Cargotec for customers in Australia," Mr Sims said.
"The barriers to entry in the container handling equipment market are high as the machinery and software is very sophisticated and suppliers have to invest significant time and resources to develop their equipment and demonstrate that it will work well over a long life."
The ACCC is also considering the proposed merger's effect on the supply of mobile container handling equipment in Australia, and repair and maintenance services.
"The merged entity would become the largest supplier of mobile container handling equipment in Australia, and we will further consider the extent to which other competitors including Hyster, Clark Equipment and Sany would competitively constrain Cargotec and Konecranes post-merger," Mr Sims said.
"We understand that Cargotec and Konecranes currently supply some critical inputs like diagnostics equipment and proprietary spare parts, which allow their customers to do their own maintenance or get maintenance services from a third party."
"Currently, Cargotec's customers would be able to switch to Konecranes' equipment if Cargotec attempted to withhold these critical inputs. We are investigating whether the merged entity would be able to successfully withhold these inputs to force customers to obtain maintenance services from them," Mr Sims said.
The ACCC invites submissions from interested parties in response to the statement of issues by 19 November 2021. The ACCC's final decision is scheduled for 17 February 2022. More information is available on the public register page.
Background
Cargotec is a Finnish publicly listed supplier of material handling solutions, ranging from container handling equipment and services to engineering solutions for the maritime industry.
In Australia, Cargotec's Kalmar business supplies container handling equipment and services, including aftersales servicing and spare parts. Cargotec's Inver Port Services business provides maintenance and specialised engineering services to the stevedoring industry.
Cargotec's Bromma division supplies spreaders for use in container handling equipment. A spreader is the piece of equipment that grips the container.
Konecranes is a Finnish publicly listed supplier of material handling solutions, ranging from container handling equipment and services to solutions for the general manufacturing and processing industries.
In Australia, Konecranes' Port Solutions business is involved in the sale of container handling equipment and terminal solutions. This includes Konecranes' brands such as Noell (acquired as part of Konecranes' acquisition of Terex' Material Handling and Port Solutions business) for automated and manual straddle and shuttle carriers.
Konecranes mobile equipment is primarily supplied to customers by its distributor United Equipment.
