Transurban’s WestConnex bid under threat after ACCC delays ruling

Transurban’s $17bn bid for Sydney’s WestConnex project is in jeopardy after the ACCC delayed a ruling on its concerns.

A WestConnex construction site in Sydney. Pic: Gordon McComiskie

Transurban’s $17 billion bid for Sydney’s WestConnex toll road project is in jeopardy after the competition watchdog delayed a ruling on the project until September 6.

The Australian Competition and Consumer Commission in May raised concerns about Transurban’s bid to operate WestConnex, citing its grip on the domestic toll road market.

A decision was expected by today but the ACCC now says it needs more time to consider “arguably the most significant” toll road transaction in Australia “in the foreseeable future”.

However the tender being run by Goldman Sachs is due to close next week, and the Transurban consortium can no longer make that deadline.

The question then becomes whether the NSW government delays the tender, in which only one other consortium — that headed by fund manager IFM Investors — remains.

As pressure mounted on the NSW government to delay the tender on the controversial project, the NSW opposition called on it to halt the sale altogether, saying to proceed “would be reckless and irresponsible” given ACCC concerns.

Some in the Transurban camp believe the ACCC has deliberately blown out this schedule to avoid making a decision, because if IFM wins the contract then the competition issue disappears.

What makes matters worse for Transurban is that its bid includes Abu Dhabi and Canadian money, so needs Foreign Investment Review Board approval.

This won’t come until after the ACCC ruling.

The need for Australian Taxation Office approval further complicates the issue.

The ACCC has had the matter under consideration since February, so no new issues are at stake.

Explaining the need for more time, ACCC chief Rod Sims said today: “WestConnex is an unusually large toll road project and we are dealing with unusually complex competition issues that we simply require more time to consider.

He added: “We recognise that the decision to extend the timeline for our decision may have flow-on impacts for the WestConnex sale process, so we do not do this lightly. However the reality is that this is a major transaction in the context of NSW toll roads, arguably the most significant in Australia in the foreseeable future.

“We continue to have competition concerns, with many complex elements requiring analysis, and we need to get to the bottom of them before we make a decision.”

The ACCC said in May that Transurban controls 15 of 19 toll road concessions in Australia and it was concerned about the impact of the WestConnex deal on competition.

Transurban has argued it has no pricing power because this is set by the state government and the road is not a monopoly because there are alternative routes.

The opposing view says it has market power which will be increased by operating the WestConnex asset and that its behaviour in Melbourne shows state governments have little choice but to accept its offers.

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