News / Australian competition body appeals court ruling on port commitment deeds

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Australia’s competition regulator, the Australian Competition and Consumer Commission (ACCC), has lodged an appeal following last month’s Federal Court decision in favour of NSW Ports Operations and subsidiaries Port Botany Operations and Port Kembla Operations.

In a decision only made public last week, the federal court allowed NSW Ports to maintain its port commitment deeds (PCDs), which compensate the terminal operator if the rival port of Newcastle handles more than 30,000 teu.

ACCC chairman Rod Sims said the commission was appealing the decision because it believes the purpose and the effect of the compensation provisions agreed at the time Port Botany and Port Kembla were privatised were “anti-competitive”.

“Agreements entered into when existing state-owned monopoly businesses are being privatised, which seek to maximise profit from the sale by protecting that monopoly from competition in the future, are inherently anti-competitive,” he said.

According to the ACCC, the port commitment deeds could prevent a competing port, which could benefit customers and the wider population, from being developed for the next 50 years.

“We will argue that the court made an error in finding that the PCDs didn’t have an anti-competitive purpose, even though the court found that the purpose of the deeds was to secure a higher sale price for the state from selling the existing monopoly of Port Botany, and ensure that NSW Ports would retain the full value of that monopoly,” said Mr Sims.

In addition, the ACCC argues that the court’s view – that competition law did not apply because the state was not carrying on a business when it entered into the PCDs and that NSW Ports benefited from derivative crown immunity – was “erroneous”.