Separate proposals to acquire a 50-year lease of the Port of Melbourne have received the green light from the nation’s competition regulator.
The Australian Competition and Consumer Commission has released a statement saying it would not oppose two proposals by consortia to acquire the Port lease, after “careful consideration” of cross-ownership interests and vertical relationship matters.
The ACCC reviewed both the IFM Consortium and QIC Consortium proposals focusing on the cross-ownership interests in the Port of Melbourne, New South Wales Ports and the Port of Brisbane as well as so-called vertical relationships with port service providers operating at Melbourne.
“The ACCC conducted extensive inquiries with a large number of port users and stakeholders at various levels of the supply chain. The ACCC has formed the view that neither acquisition would result in a substantial lessening of competition,” ACCC chair Rod Sims said.
“While there are a small group of exporters in southern NSW, particularly in the Riverina region, who have the option of using Port Botany or the Port of Melbourne, the vast majority of port users have no choice, for them the Port of Melbourne is a monopoly asset.”
According to a statement, the ACCC also explored several potential vertical issues arising from some consortium members having interests in port users, including stevedore DPWA and ANZ Terminals (a bulk liquids storage provider), in relation to the IFM Consortium; and DPWA and rail business Pacific National in relation to the QIC Consortium.
“The ACCC identified several constraints on the consortium members’ ability to discriminate in favour of these downstream port services providers or to share commercially sensitive information regarding rivals of these providers,” Mr Sims said.
“Further, no single consortium member will control the Port, or has a controlling stake in other ports or vertically related businesses.
“The existence of other significant shareholders in each business limits any potential competitive detriment.”
According to the ACCC, the proposed regulatory regime is largely separate to this competition assessment, with the regime to apply at Melbourne to be overseen by the Victorian Essential Services Commission.
Mr Sims said the regulation of monopoly infrastructure assets raised several separate issues that could not be dealt with under the section 50 test applied to merger reviews.
“However, the ACCC did note that the proposed regulatory regime at the Port of Melbourne provides for stronger pricing oversight than applies at most other ports following privatisation,” he said.
The ACCC also considered whether cross-ownership issues would give the ports an increased ability to hike rents, due to knowledge of rents at other ports and information about a port user’s willingness to pay.
The ACCC determined that benchmarking already occurs, rents and other charges are typically known to an extent across the industry and that, even if the port operator gained some additional knowledge about rents or willingness to pay, this is unlikely to significantly increase their bargaining power in rent negotiations with tenants.
The IFM Consortium comprises:
- IFM Investors (IFM), a fund manager based in Australia with over $60 billion in assets under management. Proposed 50-55% interest in Port of Melbourne;
- APG Asset Management N.V. (APG), a Dutch pension fund manager with approximately $618bn in assets. Proposed 25-30% interest in Port of Melbourne;
- Macquarie Infrastructure and Real Assets (MIRA), a business division of Macquarie Group Limited, which manages infrastructure assets of $130bn. Proposed interest in Port of Melbourne of 20%.
The QIC Consortium comprises:
- QIC Private Capital (QPC), on behalf of a number of managed or advised funds and clients. QPC undertakes private capital investment on behalf of its parent company QIC Limited, which is an Australian fund manager owned by the Queensland Government. Proposed interest in Port of Melbourne of 40%;
- GIM Advisory Services, LLC (GIMAS), on behalf of its affiliates and managed or advised funds and clients. Proposed interest in Port of Melbourne of 20%;
- Borealis Infrastructure Management, on behalf of the Ontario Municipal Employees’ Retirement System and potentially some members of contractual co-investment arrangement known as Global Strategic Investment Alliance. Proposed interest in Port of Melbourne of 20%.
Consortium interests in other ports and port users:
- IFM has a 35% interest in NSW Ports and a 26.7% interest in Port of Brisbane;
- APG has a 4.4% indirect interest in DP World Australia;
- A related entity of MIRA has an indirect interest of less than 12% in ANZ Terminals;
- QPC manages a 26.7% interest in Port of Brisbane on behalf of its managed clients;
- GIMAS manages a 15% interest in NSW Ports on behalf of a managed client;
- A participant in the member group managed by QPC holds a 24.4% indirect interest in DPWA. QPC is managing that member’s 20% interest in the Port of Melbourne.
This article originally appeared in Rail Express affiliate Lloyd’s List Australia.
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