The Australian Competition and Consumer Commission (ACCC) has some serious reservations about a proposed takeover of ports and rail operator Asciano, by a Brookfield Infrastructure Partners consortium.

The ACCC says the merger could substantially reduce competition for rail haulage services under its current terms.

Brookfield is looking to take over Asciano's Pacific National rail business, but the ACCC says the vertical integration this would create between Pacific National and Brookfield's rail network in Western Australia and its Dalrymple Bay coal terminal in central Queensland would work to “substantially lessen competition” in rail haulage in those areas.

ACCC chairman Rod Sims if Brookfield began to favour Pacific National, it would mean less choice for users looking for haulage companies to deliver goods to the ports.

“Pacific National is obviously one of the two main rail haulage companies in the country and the idea that they would vertically integrate with the monopoly infrastructure owners does cause us to have significant concerns,” Mr Sims told the ABC.

“In the language that we use, this is a ‘red-light’ statement of issues, and it's fair to say our concerns are quite strong,” he said.

“On the other hand of course, we will look at things as they come forward with an open mind.

Mr Sims said there was strong market opposition to the proposed merger, and the ACCC would have to include those opinions in deciding its own stance.

He also said that while both Western Australia and Queensland had systems set up to facilitate access to rail services, they were not capable of controlling the competition issues that the looming vertical integration of the two major companies would create.

“We're saying that sometimes an access regime can deal with competition issues, but obviously where those competition issues are very large, it may well be better not to have the vertical integration in the first place,” Mr Sims said.

“I guess we're raising the question that the competition concerns here are so large that it may well be the case that no access regime can deal with them and that the best outcome is to avoid the merger.

“That's the initial view we're putting out and that's out there for comment from the merger partners and the users of these facilities.”

The ACCC will accept further submissions on the matter up until November 4, and is looking to announce its final decision on the deal by December 17.