The Australian Competition and Consumer Commission has issued preliminary competition concerns regarding the acquisition of the Port of Geelong by Sydney-based asset manager Palisade Investment Partners and Hobart-based superannuation fund Spirit Super.
Following the consortium’s successful bid to buy the port, which is the largest bulk port in the Australian state of Victoria, the ACCC has flagged Palisade’s 100 percent interest in another bulk port in Victoria, the Port of Portland, as an issue that could potentially result in a significant lessening of competition between ports.
The Port of Geelong acquisition deal, announced in January, would see the consortium buy it from Brookfield Asset Management and State Super for a reported A$1.2 billion ($901 million; €806 million). With Palisade set to acquire a 49 percent stake in the port via its open-end Diversified Infrastructure Fund, the ACCC noted the proposed acquisition would lead to common ownership between Port of Geelong and Port of Portland.
Both ports combined handle more than half of Victoria’s bulk cargo in a market structure that ACCC commissioner Stephen Ridgeway said was “unlikely to change in the foreseeable future”.
“We are concerned the acquisition may substantially lessen competition in Victoria for the supply of port services for bulk cargo,” Ridegway said in a statement.
“Ports play a critical role in the movement of goods in Australia’s economy and there is some ability for major port users to choose between the Port of Geelong and Port of Portland when making very substantial infrastructure investments at the ports. Any substantial lessening of competition between ports therefore has the potential for significant negative impacts on a range of industries.
“While the acquisition would not provide Palisade with outright control of Port of Geelong, it would obtain a degree of influence over the Port of Geelong. In addition, common ownership could lessen the incentives for the Port of Portland to compete for customers through existing facilities and future investments in infrastructure.”
The commission said it was “exploring the degree of competition likely to be lost if the proposed acquisition proceeds” with a final decision from the ACCC scheduled for 9 June.
“We are continuing to work with the ACCC on their process and remain confident that the transaction will be cleared,” Palisade executive director Alastair Pollock told Infrastructure Investor.
Should the deal be approved by the ACCC, Spirit Super will acquire the remaining 51 percent stake in Port of Geelong.
Spirit Super was contacted for comment but could not be reached in time for publication.