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IN the Federal Court today, Justice Jagot dismissed the Australian Competition and Consumer Commission’s case over the legality of port sale deals between New South Wales, NSW Ports and Port of Newcastle.

The reasons for Justice Jagot’s remain unknown, as her judgement will only be published to the parties’ external legal advisers to identify information for redaction.

The judgement, for the moment, effectively ends the Port of Newcastle’s bid to build a container terminal. It keeps in place a penalty on container throughput above a minimal threshold at Newcastle.

ACCC chair Rod Sims said, “This judgment provides an enormous hurdle for the Port of Newcastle to develop a container terminal to compete with Port Botany and Port Kembla, because of financial consequences arising from the [port commitment] deeds. Less competition usually results in higher charges for businesses and consumers”.

“Absent new entry, NSW Ports will have an effective monopoly in moving containers in NSW for 50 years.

“We took this action to remove a barrier to competition in an important market, the supply of port services, which has a significant impact on the cost of goods paid by Australian consumers. Such barriers damage Australia’s productivity performance,” Mr Sims said.

“We will carefully consider the judgment.”

The ACCC said it cannot discuss the reasons for the decision because at this stage the judgment has been made available only to the parties’ lawyers, on a restricted basis, pending resolution of confidentiality issues.

In December 2018, when the ACCC began the action that was dismissed today, Mr Sims said, “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”.

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The NSW government privatised Port Botany and Port Kembla in May 2013 and the agreements, known as port commitment deeds, were entered into as part of the privatisation process, for a term of 50 years.

The port commitment deeds for Botany and Kembla oblige the state to compensate the ports’ operator if container traffic at the Port of Newcastle goes above a minimal cap.

In its case, the ACCC said the reimbursement provision in the Port of Newcastle deed is an anti-competitive consequence of the Botany and Kembla Port commitment deeds, and that it makes the development of a container terminal at Newcastle uneconomic.

Also in its case, the ACCC said the state entering into commitment deeds was likely to prevent or hinder the development of a container terminal at Newcastle, and had the purpose, or was likely to have the effect of, substantially lessening competition.

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

This article has been updated to include today’s comment from the ACCC and Rod Sims.

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