* ACCC says freight unit sale will raise prices, cut service
* Aurizon says committed to completing sale by July, 2018
* Says business will close without sale at cost of 350 jobs (Adds Co's response to ACCC, background, updates shares)
By Chandini Monnappa
March 15 (Reuters) - Australian rail operator Aurizon Holdings AZJ.AX said on Thursday said it was committed to completing the proposed sale of its freight business by July, after the country's competition watchdog raised concerns about the plan.
Aurizon said it would make detailed submissions to the Australian Competition and Consumer Commission (ACCC) about the matter, and reiterated that it would close the business if the sale did not go through, with the loss of up to 350 jobs.
The regulator said it was concerned the sale, which would combine the only two railway haulers in the state of Queensland, could lead to increased prices and reduced service for freight hauled between the capital Brisbane and the state's far north.
"We are concerned about the impact on competition in the freight industry," ACCC Chairman Rod Sims said in a statement earlier on Thursday.
Aurizon said in August last year that it had decided to quit the loss-making freight business, selling two units for A$220 million ($174 million) and closing a third arm, allowing it to focus on coal haulage. planned to sell its Queensland rail and road freight business to a consortium of Linfox and Pacific National and its Acacia Ridge intermodal rail terminal separately to Pacific National.
The company said on Thursday that the regulator's statement was based on the assumption that the freight business could be sold to a third party, but reiterated that was not the case.
As well as a loss of jobs, a closure of the business would also be likely to affect rail services and rail line haul capacity in Queensland, potentially disrupting freight supply chains, it said.
The regulator is expected to make a final decision on May 24.
Aurizon shares slipped as much as 2.1 percent in early trade before largely recovering in a slightly weaker overall market. .AXJO .