NSW govt vindicated as port case dismissed

Allegations that contracts between the NSW government and the owners of its largest ports were anti-competitive and illegal have been thrown out of court.

The competition watchdog had alleged the agreements made it uneconomical for the Port of Newcastle to handle shipping containers.

Federal Court Justice Jayne Jagot on Tuesday dismissed the Australian Competition and Consumer Commission’s case against the owner of Sydney’s Port Botany.

Her reasons for judgment will be released at a later date once parties redact confidential information.

The decision vindicates the Liberal-National state government, which privatised both ports for a combined $6.85 billion after coming to power in 2011.

A report commissioned by Port of Newcastle in 2018 suggested NSW’s gross state product would increase by $6 billion through to 2050 if it was allowed to develop a large-scale container terminal.

Over half of that would come from lower freight costs, the analysis by economic consultancy AlphaBeta found.

But a later report, commissioned by Port Botany’s owner NSW Ports, found Port Kembla in Wollongong would be the most viable candidate for a second container terminal given it was closer to Sydney’s booming west.

The 50-year agreements required NSW to compensate NSW Ports should Newcastle develop a container port and divert traffic from Port Botany.

But NSW wouldn’t be out of pocket, with a second deal requiring Newcastle to recompensate the state.

The conditions of sale and levy were kept secret from the public and the parliament, an upper house committee found in 2019.

Port of Newcastle is the world’s largest coal export port and the country’s third-largest port by volume.

But it handles few containers, lacking the specialist equipment that allows Port Botany to handle 2.7 million standard container units each year.

The compensation clauses kicked in once Newcastle exceeded a cap of about 30,000 units annually.

The amount of compensation effectively prevents or hinders any new owner of the Port of Newcastle from developing a container terminal, the ACCC alleged.

But NSW Ports denied the watchdog’s key allegations, including those concerning the purpose and effect of the agreements.

It also filed a cross-claim against the Port of Newcastle owners and the state government.

That case argued that the court would have to find the Port of Newcastle recommendation deal anti-competitive if such a finding was made about the NSW Ports deal.

That claim was dismissed.

NSW Ports is owned by an investor consortium comprising industry superannuation funds including Australian Super, CBUS, HESTA, HostPlus and Q Super.

Port of Newcastle is owned by Hastings Funds Management and China Merchants.

NSW wasn’t sued by the ACCC, which argued the state government wasn’t “carrying on a business” when leasing the ports.

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