THE FULL Bench of the Federal Court today (23 February) dismissed the Australian Competition and Consumer Commission’s appeal in a case over the legality of port sale deals between the New South Wales Government, NSW Ports and the Port of Newcastle.
The order, issued by Chief Justice Allsop, Justice Yates and Justice Beach did not indicate the reasons behind the decision. It will only be published to the parties’ external legal advisers to identify information for redaction.
The ACCC’s case was first dismissed in June 2021.
The ACCC had alleged that agreements entered into by NSW Ports at the time the state of NSW privatised the Ports of Botany and Kembla were anti-competitive.
The agreements, known as the Port Commitment Deeds, oblige the State of NSW to compensate the operators of Port Botany and Port Kembla if container traffic at the Port of Newcastle is above a minimal specified cap. The Port Commitment Deeds were entered into in 2013, for a term of 50 years.
Another 50-year deed, signed in May 2014 when the Port of Newcastle was privatised, requires the Port of Newcastle to reimburse the State of NSW for any compensation paid to operators of Port Botany and Port Kembla under the Botany and Kembla Port Commitment Deeds. This reimbursement would significantly increase the cost of moving a container at the Port of Newcastle.
A statement from the ACCC said the court dismissed its appeal against the trial judge’s findings that NSW Ports had “derivative crown immunity” and that the ACCC had not established that the purpose and likely effect of the compensation provisions was anti-competitive.
“We originally took this action because we were concerned that under the Port Commitment Deeds NSW Ports has an effective monopoly in container port services in NSW for 50 years,” ACCC Commissioner Liza Carver said.
“We appealed this case because we considered that the compensation provisions created a significant barrier to entry. The threat of new entry is an important part of the competitive process, and imposes a competitive discipline on existing businesses, including monopolies.”
NSW Ports welcomed the court’s decision, with the company’s CEO, Marika Calfas, saying the dismissal of the ACCC’s claims was a win for economic certainty and prosperity across the state, to the benefit of consumers, exporters and importers.
“Maintaining the right ports and freight strategy to cater for NSW’s growing trade needs is crucial to the State’s economic future,” she said.
NSW Ports said the court’s decision aligns with the NSW government’s long-term container port strategy that using capacity at Port Botany first, followed by a new container terminal at Port Kembla, best supports the state’s trade needs.
A spokesperson for the Port of Newcastle said much had changed since the ACCC first filed its case in 2018 and there is now a way forward for the port to build a container terminal.
“These issues were recognised and acted upon by the Member for Lake Macquarie, Mr Greg Piper MP and the NSW government, with the passing of the Port of Newcastle Extinguishment of Liability Act in November 2022,” the Port of Newcastle spokesperson said.
“Once the appointment of the valuer is announced by the government under the act, the final part to the legislative process will have commenced, providing a way forward. Port of Newcastle remains committed to the economic prosperity of the Hunter and Northern NSW through the construction of a container terminal.”
The ACCC said the passage of the legislation should facilitate competition between ports in NSW for the provision of container port services.
This article has been updated to include comment from the ACCC.
