* No easy fix to regulatory concern
* Deal will be delayed until 2016
* Brookfield working with regulator to address concerns
* Shares down on delay concerns
(Adds comments from Brookfield)
By Byron Kaye
SYDNEY, Oct 15 (Reuters) - An Australian regulator raised
antitrust concerns over a planned $6.5 billion takeover by
Canada's Brookfield Asset Management BAMa.TO of freight firm
Asciano Ltd AIO.AX , potentially jeopardising the country's
biggest inbound deal in four years.
The proposed deal, which would be the largest-ever purchase
of an Australian firm by a Canadian company, would give
Brookfield Asciano's rail network and train operations in two of
the country's eight states, the Australian Competition and
Consumer Commission (ACCC) said in a statement on Thursday.
"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," the commission's chairman
Rod Sims said.
While the ACCC made no mention of blocking the deal in its
entirety, the statement raised uncertainty about whether
Brookfield can overcome the regulator's concerns without carving
out large parts of the target company's business - a move which
would make it less appealing to buy.
Asciano shares fell 8 percent to A$7.89 by mid-afternoon.
The shares are now below both Brookfield's A$9.15 offer price
and below their level before the companies first said in August
that they had agreed to the deal. The broader market .AXJO was
trading higher.
"It's really difficult, quite frankly, to see an easy solve
to this," said Georgina Foster, a competition lawyer at Baker &
McKenzie in Sydney.
In cases where a company wants to acquire several parts of
an industry, the ACCC is typically hesitant to approve the deal,
concerned that other players would be shut out, Foster said.
Sims said the ACCC already regulates rail freight access,
but noted that "where the owner of such infrastructure
vertically integrates with one of a very limited number of users
of the infrastructure ... an access regime may not be capable of
averting a substantial lessening of competition".
Adding to the imposition, the ACCC said it will now give a
final ruling by Dec. 17, scuppering the companies' assurances to
investors that they would have the sale completed by the end of
the year.
In a statement, Asciano said Brookfield "is working closely
with the ACCC to address its concerns", and that it expects the
takeover to proceed in January, rather than December as planned.
Brookfield said it was confident it could satisfy the ACCC's
concerns "through a combination of the existing regulatory
frameworks and commitments given by Brookfield, which would be
consistent with previous ACCC clearances in similar
circumstances".
($1 = 1.3691 Australian dollars)