Qube (ASX:QUB) share price falls amid ACCC enforcement investigation

The competition watchdog is taking a look into Qube’s latest aquisition

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The Qube Holdings Ltd (ASX: QUB) share price is in the red after the Australian Consumer and Competition Commission (ACCC) announced it is investigating the company’s latest acquisition.

According to the watchdog, it previously requested Qube delay its recent acquisition of the Newcastle Agri Terminal while it investigated its potential competitive impact. However, Qube went ahead and finalised the purchase late last month.

Now, the ACCC has now begun a law enforcement investigation into the potential impacts of the acquisition.

At the time of writing, the Qube share price is $3.27, 0.61% lower than its previous closing price.

Let’s take a closer look at the drama that has unfolded today.

Quick refresher

Qube is an import and export logistics services provider.

It owns and operates grain storage sites in New South Wales’ Orana Region and supplies rail haulage in the state. Qube also owns and operates the Quattro bulk grain terminal in Port Kembla.

On top of its other New South Wales-based grain operations, the company recently acquired the Newcastle Agri Terminal for $90 million. The Newcastle Agri Terminal is a grain export hub.

The Qube share price gained 4.5% when the company announced the acquisition. The purchase was completed on 30 September despite the ACCC calling for it to be delayed.

The news driving the Qube share price today

Today, the Qube share price is falling as the ACCC embarks on an enforcement investigation into the company’s latest acquisition.

According to the competition watchdog, numerous industry participants approached it with concerns about the impact of Qube’s acquisition.

The ACCC has now begun an investigation into Qube’s new vertically integrated position in the supply chain of bulk grain.

The body will be looking into Qube’s potential to engage in anti-competitive behaviour, such as bundling storage, handling, and transport with terminal services. It’s also concerned about Qube’s ability to discriminate against its rivals.

If the acquisition is found to be anti-competitive, the ACCC could order Qube to divest the Newcastle Agri Terminal or declare the transaction void. The watchdog could also seek penalties for the unapproved acquisition.

ACCC’s chair Rod Sims commented on the news driving the Qube share price today, saying:

It is worrying when a major vertically integrated player pays $90 million for key infrastructure used for the export of agricultural products without first obtaining the ACCC’s view on whether the proposed acquisition is likely to have the effect of substantially lessening competition.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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