The world’s largest coal export port at Newcastle has suffered a major setback in its bid to diversify from handling the fossil fuel after legal action aimed at increasing competition between container ports in NSW failed.
The decision on Tuesday to throw out the case spurred the country’s competition tsar, Rod Sims, to warn that the operator of Sydney’s Port Botany and Illawarra’s Port Kembla will have an “effective monopoly” in transporting containers in NSW for 50 years.
The Federal Court judgment comes more than two years after the Australian Competition and Consumer Commission launched legal action aimed at the terms on which the Coalition government in 2013 privatised the operation of Port Botany and Port Kembla for $5.1 billion.
The ACCC’s legal action concerned agreements that were entered into as part of the privatisation for a term of 50 years.
The so-called port commitment deeds oblige the state government to compensate NSW Ports, which operates Port Botany and Port Kembla, if more than 30,000 containers are transported annually through the Port of Newcastle.
Another 50-year deed, signed in 2014 when the Port of Newcastle was privatised, compels that port to reimburse the state for any compensation paid to NSW Ports under the deeds.
The regulator argued that those repayments will, in effect, double the cost of moving a container at the Port of Newcastle, making the development of a container terminal there uneconomic.
ACCC chairman Rod Sims said the judgment created an “enormous hurdle” for the Port of Newcastle to develop a container terminal to compete against Port Botany and Port Kembla, because of the financial consequences from the deeds.