The competition watchdog has raised concerns about the proposed $12 billion takeover of Asciano by Brookfield Infrastructure will reduce competition.
The Australian Competition and Consumer Commission said the massive takeover could lead to rail haulage in Western Australia and Queensland being dominated by the Canadian transport and utilities giant.
The ACCC has said it will take another two months to assess the impact of what would be the biggest logistics deal in Australian corporate history.
Investors did not find the news from the competition watchdog encouraging, with Asciano shares down almost eight per cent to $7.88.
Brookfield's bid for the port and rail operator behind Patrick stevedores and Pacific Rail was approved by shareholders in August, but Asciano said the earliest it can now be completed is January.
The ACCC is holding up the cash-and-scrip deal after hearing strong concerns from some in the industry that Brookfield would favour Pacific National through its Brookfield Rail and Dalrymple Bay coal terminal operations.
"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 WA and Queensland," ACCC chairman Rod Sims said, who will announce a final decision on December 17.
"While there are access regimes in place for these businesses, they are primarily intended to deal with market failure issues that are inherent for any monopoly infrastructure. They do not currently need to address the competition issues that arise from vertical integration."
Asciano responded to the ACCC announcement with a statement which said Brookfield is "working with the ACCC to address its concerns".
Mr Sims said the nature of the business made it particularly important for the ACCC to study the implications.
"Competition concerns can be particularly acute in cases involving key infrastructure assets of a technical nature, which require many operational decisions to be made on a daily and longer-term basis," Mr Sims said.
Asciano, which this month announced it will spend $100 million on a new freight terminal to move more freight from Sydney's Port Botany via rail, lifted full-year profit to $360 million for 2014/15.