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Brookfield's US$6.5b Asciano bid faces regulatory hurdle

Brookfield Infrastructure Partners chief executive officer Sam Pollock (left) and John Mullen, Asciano Chief Executive Officer, smile following a press conference in Sydney on Aug 18, 2015.

[MELBOURNE] Brookfield Infrastructure Partners's proposed A$8.9 billion (US$6.5 billion) acquisition of Asciano Ltd faces a more detailed regulatory review after the nation's competition watchdog said it was concerned the deal could lessen competition in rail haulage.

The Australian Competition & Consumer Commission deferred a decision on the proposal until Dec 17 and asked for further comments from others in the market, according to a statement from the regulator on Thursday. Market participants had raised "strong concerns" about Brookfield combining its existing rail assets with Asciano's Pacific National rail business, the ACCC wrote. Asciano shares tumbled in Sydney trading.

"The ACCC is concerned that the vertical integration will lead to a substantial lessening of competition in related markets for the supply of above rail haulage services in Western Australia and Queensland," Chairman Rod Sims said in the statement.

Brookfield Asset Management Inc, Canada's largest alternative asset manager, in August led a group that agreed to buy the Australian company in a cash and stock deal to gain control of the Pacific National rail unit and stevedoring businesses at ports in Melbourne, Sydney and Brisbane. The transaction would be the group's largest in Australia, exceeding the A$4.8 billion it paid in 2007 for Multiplex Group, the builder of London's Wembley Stadium.

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The Canadian company owns the Westnet rail business in Western Australia and controls the Dalrymple Bay Coal Terminal in Queensland. "Market participants have raised strong concerns about Brookfield's ability and incentive to favor Pacific National through its Brookfield Rail and DBCT businesses," the ACCC wrote.