“Lift the Penalty and We’ll Build It”

The Federal Court has released the reasons for its judgment dismissing the ACCC case against NSW Ports.

The court found the the NSW Government stipulation in the Port Commitment Deeds did not have the purpose or likely effect of “substantially lessening competition.”

Concept: container terminal at PoN’s Mayfield precinct. Image by Port of Newcastle

It also made the startling assertion that the “mere speculative  hopes” of a container terminal at Port of Newcastle(PoN) “were, and remain, far-fetched and fanciful on the evidence, and were not a real chance or real possibility.”

Port of Newcastle CEO Craig Carmody rejected as “baseless and misleading” any suggestion that PoN wouldn’t build a container terminal if the restrictions were lifted.

Port of Newcastle maintains its real-world view that a container terminal is entirely viable – and necessary – at the Port.” Mr Carmody said.

The judgment clearly accepts that Port of Newcastle has the ability to compete in the same market as Port Botany. The only factor preventing the Port from building the container terminal is the unfair restrictions placed on container movement above a TEU cap at the Port of Newcastle.

If there’s any doubt we’d build the container terminal, simply lift the penalty. Enable Port of Newcastle to maximise our commercial potential freely, and watch us build it.

NSW Ports Chief Executive Marika Calfas said the court’s judgment supported the claim that the State’s container port strategy (Port Botany followed by Port Kembla, then Newcastle) is in the public interest, as it provides for the most effective use of investment and efficiency of the freight task in NSW.

Outcome an “emphatic win” for the people of NSW and NSW Ports,” she said.

NSW Ports will continue to focus on ensuring the key trade gateways of Port Botany and Port Kembla deliver efficiently and sustainably for the people and businesses of NSW.”

In her judgment, Justice Jayne Jagot noted that the prospect of Port of Newcastle developing a container terminal in the reasonably foreseeable future while Port Botany has capacity “is fanciful, far-fetched, infinitesimal or trivial”.

The judgment supported the principle of NSW’s container port strategy, that container terminal development should be conducted in sequence, with existing capacity at Port Botany utilised first, followed by Port Kembla and only then Port of Newcastle.

Her Honour found that in the seven years since privatisation, Port of Newcastle has not formulated an investment grade business case suitable of being put to its own board and shareholders for the development of a container terminal, even without the provisions of the Port Commitment Deeds in place.

But Mr Carmody said there was appetite and support for a container terminal in Newcastle from NSW and international suppliers.

Development of another container terminal in NSW, even whilst Port Botany still has capacity, would provide viable alternative and more cost-effective export routes for regional NSW suppliers, increasing their competitiveness and enabling Port of Newcastle to contribute even more to the State’s economy.

This legal decision does not alter Port of Newcastle’s desire to build a container terminal, nor our confidence that a container terminal at the Port is a diversification opportunity the Port, Newcastle and the Hunter Region needs.

The Court further found that the provisions in the Port Commitment Deeds were used to provide investors with certainty about the State’s container port strategy to ensure that the State received maximum value for the asset sales.

Pictured: Craig Carmody, Port of Newcastle CEO.

On 29 June 2021, Justice Jagot dismissed in full the ACCC’s allegations that the provisions of the Port Commitment Deeds between the State of NSW and NSW Ports were anti-competitive.

The proceedings by the ACCC in the Federal Court concerned agreements, known as Port Commitment Deeds (PCD), which were entered with the NSW Government as part of the privatisation of Port Botany and Port Kembla in May 2013, and the privatisation of Port of Newcastle in May 2014.

Infrastructure analyst Greg Cameron has been closely following the container issue for over a decade. He claimed the ACCC’s action was misconceived in 2019 when the case was announced.

The ACCC is alleging in the Federal Court that NSW Ports entered into agreements with the government in May 2013 containing provisions involving the development of a container terminal at the Port of Newcastle, which are anti-competitive and illegal,” Mr Cameron.

But the ACCC is taking no action against the NSW government… By accepting declared government policy, the ACCC’s action against NSW Ports is invalid.

Mr Carmody said Port of Newcastle has the ability to compete in the same market as Port Botany, and that NSW State Government Policy is the major constraint to this.

We await with interest the decision by the ACCC whether to appeal the Court outcome, expected next week.”