By Matt O'Sullivan
The competition tsar says Transurban holds a near-monopoly over toll roads in Sydney, leaving it to weigh up whether motorists would be better off if a competitor gained a majority stake in the $16.8 billion WestConnex toll road project.
The Australian Competition and Consumer Commission's initial concerns about a Transurban-led consortium taking control of WestConnex threaten to complicate the Berejiklian government's privatisation of the toll road project within the next three months.
The ACCC has concerns about Transurban gaining majority control of WestConnex.Credit: Steven Siewert
Releasing its preliminary competition concerns, ACCC chairman Rod Sims said the two key issues to be canvassed over the next two months were whether an alternative owner of WestConnex could deliver cheaper tolls or better service for motorists, and if Transurban’s ownership of the new toll road would give it an advantage when bidding to build future motorway projects.
“It is competition for both the building of a toll road and the operation of toll roads that we are looking at. We are taking it very seriously,” he said.
Mr Sims said an alternative owner of WestConnex had the potential to result in cheaper tolls or an improved level of service.
“It does give you choice and that just keeps people on their toes,” he said.
Transurban controls 15 of the 19 toll roads in Australia, and seven of the nine existing concessions in NSW. Of the 99 kilometres of toll road in Sydney, the company has a majority stake in, or half owns, 95km, including the M2, the M7 and the Lane Cove and Cross City tunnels.
Transurban has a stranglehold on Sydney's growing labyrinth of toll roads such as the Lane Cove Tunnel.Credit: Bloomberg
Mr Sims said Transurban had a position “fairly close” to a monopoly position over toll roads in both NSW and Queensland. That meant that Australia's largest toll road operator already had “significant incumbency advantages” when competing for future motorway projects.
The regulator is concerned that Transurban's access to highly detailed traffic data when bidding for new roads means it will be able to leverage its existing toll roads to offer “unique unsolicited proposals” to state governments.
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,” Mr Sims said.
The regulator has called for submissions in response to the release of its statement of issues, and 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. It 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, CPB 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 the final shape of the Rozelle interchange had yet to be decided.