ACCC fears Transurban will gain too much advantage from WestConnex buy
The competition watchdog fears that Transurban's bid to buy a majority stake in Sydney's $16.8 billion WestConnex toll road will give it too much advantage when competing for future projects.
The Australian Competition and Consumer Commission's concerns complicate the Berejiklian government's imminent privatisation of the majority of WestConnex within the next three months.
Releasing the regulator's preliminary views on the proposed acquisition, ACCC chairman Rod Sims said Transurban already had “significant incumbency advantages” when competing for future toll road projects.
“We are concerned that the proposed acquisition may cement Transurban’s advantages when competing for future toll roads,” Mr Sims said.
Mr Sims said Australia's largest toll road company had access to highly detailed traffic data when bidding for new roads and was able to leverage its existing toll roads to offer “unique unsolicited proposals to state governments”.
Transurban controls 15 of the 19 toll roads in Australia, and seven of the nine existing concessions in NSW. Of the 95 kilometres of toll road in Sydney, the company has a majority stake in, or half owns, 99km including the M2, the M7, the M5 South West, the Eastern Distributor, and the Lane Cove and Cross City tunnels.
Mr Sims said Transurban had been awarded five toll road concessions or upgrades following unsolicited proposals to state governments, in exchange for increases or extensions of existing tolls.
“It is the only operator in the past 30 years who has been granted a toll road concession in Australia following an unsolicited proposal to a state government,” he said.
The regulator is also concerned about the effects of a successful Transurban bid for WestConnex on competition between toll roads in Sydney. It is examining whether motorists in Sydney could switch between existing Transurban toll roads and WestConnex for certain trips.
“If there is potential competition between WestConnex and Transurban’s existing toll roads, motorists might lose the benefits from that competition if the acquisition goes ahead,” Mr Sims said.
The regulator has called for submission's in response to the release of its statement of issues, and it plans to make a final decision on July 19.
Transurban and its large partners – AustralianSuper, Abu Dhabi Investment Authority and the Canada Pension Plan Investment Board – have been vying for the past year with two other consortiums for a majority stake WestConnex. The state government hopes to complete the sale by early August, which will easily be the biggest transaction of transport infrastructure in Australia this year.
Transurban chief executive Scott Charlton said the release of the statement of issues was a recognised step in the regulator's informal merger review process.
“As we have done on previous acquisitions, we will continue to work with the ACCC to enable them to complete their review,” he said.
The regulator's findings come as the government short-listed two consortiums to build an underground interchange at Rozelle in the city's inner west for the third stage of WestConnex.
One is a consortium of John Holland, CPP Contractors and Lend Lease, and the other comprises Italian firm Salini Impregilo, Clough Projects and Samsung C&T.
The contract for the interchange will also include a 1.1-km tunnel from near the Iron Cove Bridge to the underground junction.
Both the Iron Cove Link and the Rozelle interchange are due to open to motorists a year after twin 7.5-km tunnels between Haberfield and St Peters are completed in late 2022.
The $7.2 billion third and final stage of WestConnex gained government planning approval last month, despite the fact that the final shape of the Rozelle interchange had yet to be decided.