Go-ahead for Flinders

Port Adelaide.

Image courtesy of Port Adelaide.

The Australian Competition and Consumer Commission (ACCC) has decided not to intervene in the proposed joint venture between Flinders Ports and DP World, SA.

Under the proposed partnership, the two companies will become shareholders in an entity called Adelaide Container Terminals, retaining a right to conduct container stevedoring at Port Adelaide until 30 April 2039.

The ACCC’s review began in April when Flinders Ports, port manager and co-owner of the incumbent container stevedore at Port Adelaide, proposed a joint venture with DP World for its stevedoring activities.

DP World (SA)’s current operating agreement with Flinders Ports expires on 30 April 2014.

ACCC chairman Graeme Samuel said the initial concern was Flinders Ports would have the incentive and ability to prevent prospective container stevedores from developing another terminal to cater for traffic growth in the future.

“Flinders Ports would be responsible for allocating the necessary land and licenses for container stevedoring at Port Adelaide to parties, which are also its potential competitors, giving rise to a potential conflict of interest with respect to future competition at the port,” Mr Samuel said.

The approval of the joint venture builds on submissions, particularly the projection that growth in the port’s container traffic may not reach a level to support the development of a second container terminal.

However, Mr Samuel said new entry was still likely to occur within the 30-year term, and a key requirement of the undertaking was that Flinders Ports would not allocate certain land and licenses until the ACCC has reviewed the impact on competition.

“The ACCC is satisfied that the proposed joint venture, subject to the court-enforceable undertaking, would be likely to substantially lessen competition in the relevant markets,” he said.

MREC HERE

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