ACCC gives green light to Sydney Aviation Alliance’s Sydney Airport acquisition

ACCC will not oppose the $23.6bn acquisition of Australia’s biggest airport, finding that it already has a “natural monopoly”.

The Australian Competition and Consumer Commission has given the green light to Sydney Aviation Alliance’s $23.6bn acquisition of Sydney Airport.

The regulator has ruled the takeover of Australia’s largest airport by a consortium of investment funds is unlikely to lessen competition given the airport was already a “natural monopoly”.

ACCC chair Rod Sims said its investigation found there was very little, if any, competition between Australian airports.

“This is no surprise, as we’ve been saying for a long time that Australian airports such as Sydney Airport are natural monopolies, with significant market power and no price regulation,” Mr Sim said.

“The proposed acquisition is therefore unlikely to substantially lessen competition in a market that already has such little competition.”

During its review process, the ACCC consulted with interested stakeholders including airlines, retailer groups, service providers and industry bodies.

Some stakeholders raised concerns that the proposed acquisition may add to the flow of information between airports with common ownership, which could give airports more bargaining power against airlines and other users of airports.

ACCC chair Rod Sims says the acquisition is unlikely to lessen competition. Picture: Jonathan Ng

“We understand the stakeholder concerns, however, fundamentally the lack of competition between airports means that any such sharing of information between airports would not amount to a substantial lessening of competition, which is what the law requires before we can oppose a merger,” Mr Sims said.

Market participants also told the ACCC that the current monitoring regimen was not effective in constraining Sydney Airport from charging excessive prices.

‘“The ACCC maintains the view that the threat of regulation under the current limited monitoring regimen does not constrain the pricing behaviour of our airports,” Mr Sims said.

The decision by the ACCC follows the Sydney Airport board scheduling a shareholding vote on the acquisition for early February. For the takeover to proceed, the resolutions at the scheme meeting must be approved by at least 75 per cent of all votes cast by securityholders.

It must also be approved by a majority of all securityholders present and voting (in person or by proxy) at the scheme meeting.

Sydney Airport shareholders are due to vote on the takeover early next year. Picture: Seth Jaworski.

Members of the Among the members of the Sydney Aviation Alliance include IFM’s Australian Infrastructure Fund and Global Infrastructure Fund, AustralianSuper, QSuper and Global Infrastructure Partners. Unisuper, who already owns a stake in Sydney Airport, will remain an owner under the deal.

Under the plan, Sydney Airport shareholders excluding Unisuper, who are part of the consortium, would receive $8.75 per share.

It came after two earlier proposals had been rejected for $8.25 and $8.45 per share, respectively.