By the Australian Competition & Consumer Commission
The Spirit Super and Palisade Investment Partners Consortium (the Consortium) has withdrawn its request for merger clearance from the ACCC for its proposed acquisition of the Port of Geelong. The ACCC recently informed the Consortium that it continued to hold preliminary competition concerns needing more time to investigate and the Consortium subsequently decided to not proceed with the transaction.
The ACCC released a statement of issues on 31 March outlining its preliminary concerns. The ACCC was concerned that the proposed acquisition may substantially lessen competition in the supply of port services for long-term bulk cargo customers in Victoria by reducing competition between the Port of Portland and Port of Geelong. Combined, these ports handle over half of Victoria’s bulk cargo.
The Consortium included a range of superannuation and infrastructure funds including the Diversified Infrastructure Fund managed by Palisade Investment Partners. The acquisition would have resulted in Palisade managing, on behalf of investors, 100 per cent of the Port of Portland and 49 per cent of the Port of Geelong. In addition, the proposed acquisition would have resulted in some common ownership interests across the two ports.
“We were concerned the common fund management and ownership interests between the Port of Geelong and the Port of Portland would reduce competition for customers between the ports over the medium to long term,” ACCC Chair Gina Cass-Gottlieb said.
Superannuation and other investment funds have interests in many of Australia’s critical infrastructure assets. The issue of common fund management and ownership among competing firms, including via minority interests, has increasingly become a focus of economic regulators and most has recently been the subject of a Standing Committee on Economics Inquiry.
“Common fund management and ownership that allow a degree of control or influence by minority interests have the potential to detrimentally effect competition,” Ms Cass-Gottlieb said.
“Parties proposing to acquire interests in critical infrastructure should expect the ACCC’s review will be careful and thorough. Such transactions may have long term consequences for competition. The ACCC conducts merger reviews with the rigour warranted by the complexity and significance of a transaction.”
Background
The Consortium included Spirit Super, Commonwealth Superannuation Corporation (CSC) and Palisade Diversified Infrastructure Fund (PDIF). Palisade Investment Partners proposed to manage the PDIF and CSC interests. Palisade also manages investments on behalf of investors (including PDIF) for 100 per cent of the Port of Portland.
Consortium members hold interests in other diversified bulk commodity ports in the region. Investments managed by Palisade wholly own and operate the Port of Portland in south‑west Victoria. Spirit Superannuation has a minority interest in Flinders Ports, which owns and operates seven ports across South Australia, including container and bulk ports.
The Port of Geelong is a freehold diversified bulk commodity port in Victoria. The Port of Geelong is Victoria’s second largest port, located approximately 75km south-west of Melbourne. It handles approximately 40 per cent of Victoria’s bulk cargo and is Victoria’s largest bulk commodity port. The Port of Geelong is currently owned 50 per cent by a consortium comprised of Linx Cargo Care Pty Ltd and Infrastructure Investment Corporation (managed by Brookfield) and 50 per cent by SAS Trustee Corporation.
The Port of Portland is a diversified bulk commodity, deep water port in south-west Victoria. It handles approximately 20 per cent of Victoria’s bulk cargo. By road, the Port of Portland is 290km west of the Port of the Geelong.
The ACCC commenced its public review of this matter on 18 January 2022 and expressed preliminary concerns about the proposed acquisition in a Statement of Issues on 31 March 2022.
