ACCC raises competition concerns over Transurban’s EastLink stake bid

The ACCC holds fears over Transurban’s entrenched position as the nation’s largest toll road operator, access to traffic data and lower cost finance.

The competition regulator has put up a substantial roadblock to the grab by Transurban for a majority stake in Melbourne’s EastLink toll road, releasing an issues paper on Thursday that it has “competition concerns” about the proposed acquisition.

It has raised competition fears over Transurban’s entrenched position as the largest toll road operator, its access to traffic data and modelling as well as lower cost finance which all flows from its market power.

Transurban, the nation’s largest toll road operator, had been sweating for months on the preliminary response by the Australian Competition and Consumer Commission on its planned deal to buy a controlling and majority ownership in the EastLink operator, Horizon Roads.

Already owning Melbourne’s CityLink and West Gate Tunnel project, Transurban has been pushing its case strongly that ownership of a majority stake in Horizon Roads would not impact competition.

However, the ACCC has now thrown a spanner in the works with its released statement of issues where the regulator has outlined its preliminary concerns about the impact of the proposed acquisition on competition for future toll road concessions in Victoria.

“We are considering Transurban’s advantages from already owning two toll road concessions in Melbourne, and the extent to which owning a majority interest in Horizon Roads will further advantage it when competing for future toll road projects,” ACCC chair Gina Cass-Gottlieb said.

Horizon Roads operates the EastLink toll road in Melbourne. Transurban is Australia’s largest toll road operator and in Melbourne operates the CityLink toll road and is building, and will operate, the West Gate Tunnel toll road. Another toll road, the North East Link, which is set to be operational by 2028, is being built and will be operated by the Victorian Government.

The ACCC considers Transurban’s advantages from its existing toll road operations, including traffic modelling capabilities and expertise, and access to traffic data, need to be further examined, it said in a statement.

“We are also considering whether Transurban benefits from lower cost finance due to perceptions of its existing market position, and how this may further entrench its advantages over other competitors after the acquisition,” Ms Cass-Gottlieb said.

The nearly completed EastLink project connecting northeastern Melbourne to the south.

A Transurban spokeswoman on Thursday noted the release of the ACCC statement of issues and said the toll roads operator didn‘t believe its purchase of a majority stake in Horizon Roads would lessen competition.

“Transurban notes the ACCC today released a Statement of Issues outlining its preliminary views in relation to the potential sale of a majority interest in Horizon Roads.

“Transurban will continue to proactively engage with the ACCC. We are of the view that there would be no substantial lessening of competition from the potential acquisition.”

In its lengthy statement of issues document, the ACCC is concerned that the proposed acquisition may deter the emergence of a key rival to Transurban for future toll road concessions. If the proposed acquisition by Transurban does not proceed, the ACCC considers it likely that Horizon Roads would be acquired by an alternative bidder in the sale process, the regulator said.

“Without the transaction, Horizon Roads could provide an alternative toll road owner or operator with the opportunity to gain some of the capabilities and incumbency advantages held by Transurban. This includes Horizon Road’s traffic modelling capabilities, which may be leveraged to bid competitively for future toll road projects in Victoria.” Ms Cass-Gottlieb said.

“The extent to which the Victorian Government has the ability to constrain Transurban and promote competition for future roll road concessions is another factor we are examining.”

The ACCC is also examining the impact of the proposed acquisition on the supply of electronic tolling services to motorists, the supply of tolling systems to toll road operators, and road-on-road competition between EastLink and CityLink.

Previously Transurban chief executive Scott Charlton has said he would “love to be a part” of the Horizon Roads toll roads business with a stake in the EastLink operator helping to broaden Transurban’s portfolio.