FEDERAL Court proceedings against NSW Ports for alleged anti-competitive behaviour have been announced by the Australian Competition and Consumer Commission.

According to an ACCC statement, the court proceedings against NSW Ports Operations Hold Co Pty Ltd and subsidiaries Port Botany Operations Pty Ltd and Port Kembla Operations Pty Ltd for making agreements with the State of New South Wales that the ACCC alleges “had an anti-competitive purpose and effect”.

“We are alleging that making these agreements containing provisions which would effectively compensate Port Kembla and Port Botany if the Port of Newcastle developed a container terminal, is anti-competitive and illegal,” ACCC chair Rod Sims said.

The NSW Government privatised Port Botany and Port Kembla in May 2013. The agreements, or Port Commitment Deeds, were entered into as part of the privatisation process, for a 50-year term.

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According to the ACCC, the Botany and Kembla Port Commitment Deeds oblige NSW to compensate the operators of Port Botany and Port Kembla if container traffic at Newcastle is above a minimal specified cap.

The ACCC alleges entering into each of the Botany and Kembla Port Commitment Deeds was likely to prevent or hinder the development of a container terminal at the Port of Newcastle.

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

The ACCC alleges the reimbursement provision is an anti-competitive consequence of the Botany and Kembla Port Commitment Deeds, making the development of a Newcastle container terminal uneconomic.

“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 New South Wales. The impact of any lessening of competition is ultimately borne by consumers,” Mr Sims said.

“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.”

In a public statement, NSW Ports said it “firmly believes that the agreements (including provisions of the 2013 Port Commitment Deeds) signed with the NSW Government, to lease its assets at Port Botany and Port Kembla, operate in the best interests of all stakeholders, the economy and people of NSW”.

“Having paid a consideration of $5.1bn to the NSW Government in 2013 based on the full contractual terms contained in the agreements, NSW Ports will be vigorously defending the proceedings,” the statement read.

“NSW Ports is 80% owned by Australian superannuation funds investing on behalf of more than six million individual Australians. The success of Port Botany and Port Kembla is in the national interest.”

Mr Sims, meanwhile, said he had “long voiced concerns about the short-term thinking of state governments when privatising assets and making decisions primarily to boost sales proceeds, at the expense of creating a long-term competitive market”.

The ACCC is seeking declarations the compensation provisions in the 2013 Port Commitment Deeds contravene the Competition and Consumer Act 2010.

The CCA only applies to the conduct of state governments in certain limited circumstances. NSW is not currently a party to the ACCC’s proceedings and the ACCC is not seeking orders against the state.

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