The Australian Competition and Consumer Commission (ACCC) has initiated legal proceedings against NSW Ports Operations for entering alleged anti-competitive agreements with the New South Wales (NSW) Government.

The proceedings have been initiated in Australia’s federal court and are directed against NSW Ports Operations and its subsidiaries Port Botany Operations and Port Kembla Operations.

In May 2013, the Government of NSW privatised Port Botany and Port Kembla for a period of 50 years.

As per the Botany and Kembla Port Commitment Deeds, the State of NSW must compensate the operators of Port Botany and Port Kembla if container traffic at the Port of Newcastle goes beyond a specific limit.

ACCC in its lawsuit has alleged that the provisions of the Botany and Kembla Port Commitment Deeds are likely to prevent or delay the development of a container terminal at the Port of Newcastle.

The deed could substantially reduce competition, said ACCC.

A separate 50-year deed, signed in May 2014 at the time of privatisation of the Port of Newcastle, mandated the Port of Newcastle to reimburse the State of NSW for any compensation paid to operators of Port Botany and Port Kembla.

This provision was also mentioned in the Botany and Kembla Port Commitment Deeds.

“The Port of Newcastle would be financially punished for sending or receiving container cargo above a minimal level if Port Botany and Port Kembla have spare capacity.”

ACCC Chair Rod Sims said: “We are alleging that making these agreements containing provisions, which would effectively compensate Port Kembla and Port Botany if the Port of Newcastle developed a container terminal, is anti-competitive and illegal.”

Sims further added: “The compensation and reimbursement provisions effectively mean that the Port of Newcastle would be financially punished for sending or receiving container cargo above a minimal level if Port Botany and Port Kembla have spare capacity.

“This makes development of a container terminal at the Port of Newcastle uneconomic.”

In its legal proceedings, the ACCC has sought declarations that the compensation provisions in the 2013 Port Commitment Deeds breach the Competition and Consumer Act 2010 (CCA).

ACCC has requested injunctions on the operators of Port Botany and Port Kembla from seeking compensation under the provisions of the deed.