Australian terminals rapped for anti-competitive deals

ACCC chair Rod Sims says that his organisation is alleging that making these deals, containing provisions that would effectively compensate Port Botany and Port Kembla if the Port of Newcastle developed a container terminal, was illegal and anti-competitive Photo: becca282bl/Pixabay/CC0 Creative Commons ACCC chair Rod Sims says that his organisation is alleging that making these deals, containing provisions that would effectively compensate Port Botany and Port Kembla if the Port of Newcastle developed a container terminal, was illegal and anti-competitive Photo: becca282bl/Pixabay/CC0 Creative Commons

NSW Ports Operations Hold and its subsidiaries Port Botany Operations and Port Kembla Operations have had proceedings launched against them by the Australian Competition and Consumer Commission (ACCC) for making deals with the Australian state of New South Wales (NSW) that the ACCC claims had an “anti-competitive” purpose and impact.

In a release, ACCC chair Rod Sims says that his organisation is alleging that making these deals, containing provisions that would effectively compensate Port Botany and Port Kembla if the Port of Newcastle developed a container terminal, was illegal and anti-competitive.

The proceedings have been instituted in the Federal Court, according to the ACCC. Port Botany, Port Kembla and the Port of Newcastle are all located in NSW.

The agreements, known as Port Commitment Deeds, were entered into for half a century as part of the 2013 privatisation of Port Kembla and Port Botany.

The Botany and Kembla Port Commitment Deeds oblige the state of NSW to compensate Port Botany and Port Kembla’s operators if Port of Newcastle container traffic is above a minimal specified cap.

The ACCC claims that entering into each of the Botany and Kembla Port Commitment Deeds was likely to prevent or hinder developing a Port of Newcastle container terminal and had the purpose, or was likely to have the impact, of substantially decreasing competition.

Another 50-year deed, inked in 2014 when the Port of Newcastle was privatised, obliges the port to reimburse the NSW state for any compensation paid to Port Botany and Port Kembla operators under the Botany and Kembla Port Commitment Deeds.

The ACCC alleges that the reimbursement provision in the Port of Newcastle Deed is an anti-competitive result of the Botany and Kembla Port Commitment Deeds and that it renders uneconomic the development of a Newcastle container terminal.

Mr Sims said: “We are taking legal action to remove a barrier to competition in an important market, the supply of port services, which has significant implications for the cost of goods across the economy, not just in NSW.

“The impact of any lessening of competition is ultimately borne by consumers.”

“If a competing container terminal cannot be developed at the Port of Newcastle, NSW Ports will remain the only major supplier of port services for container cargo in NSW for 50 years.”

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