Transurban may have to pay millions to rival ConnectEast after court loss

The toll roads giant may have to pay around $143m to its rival after losing a court case.

The Eastlink Tollway in Melbourne is at the centre of a dispute with Transurban.

Toll roads giant Transurban may have to fork out $143m to a rival after losing a court case over its usage fees on EastLink in Melbourne.

Details about the deal between ASX-listed Transurban and operator of Melbourne toll road EastLink have been laid bare in a judgement released by the Victorian Supreme Court that had previously been shrouded in secrecy.

In its half year results, Transurban flagged that it could appeal the decision in favour of ConnectEast but has set aside $143m in relation to the litigation.

Transurban had previously denied allegations levelled at it by ConnectEast that the fee of 18c it charged for servicing roaming agreements – which allows drivers to use their e-tag on any toll road regardless of the owner or operator seamlessly – was excessive and used to “unjustly enrich itself”.

The Victorian Sheriff's Office conducts a large-scale operation on the EastLink Tollway.

To facilitate this, Transurban charges and receives their own customers’ toll fees as they travel on the EastLink.

But emails referred to in Supreme Court judge Kathryn Stynes show that just months before it opened in 2008, ex-ConnectEast managing director John Gardiner urged former Transurban chief executive officer Brendan Bourke to accept an offer of 13.5c per trip during commercial negotiations.

However, in an email from 2007, Mr Gardiner noted Mr Bourke proposed a roaming fee of 19.5c.

Mr Bourke told Mr Gardiner in an email dated September 7, 2007, “Transurban has conceded significant ground in the Roaming Fee negotiations and my view is that a Roaming Fee lower than 20c is a very good deal for ConnectEast”.

“To get a deal done, I was prepared to recommend to our board that we move lower than our offer of 19.5c, however, at the 17.5c which you have offered I am concerned that our operating risks are not adequately covered,” Mr Bourke told Mr Gardiner in the email.

“In order for me to move your offer forward with our board, we need to deal with the operating risks.”

Around September 17, 2007, Transurban and ConnectEast agreed in principle to a roaming fee of 18c for an initial term of 10 years plus an upfront fee of $4m.

In December 2019, ConnectEaster formally requested a pricing review.

Justice Stynes rejected evidence given by Transurban’s expert Brendan Lyon over how the fee should be calculated, preferring ConnectEast’s expert Jeffrey Balchin.

Originally published as Transurban may have to pay millions to rival ConnectEast after court loss