Australia’s biggest toll road operator, Transurban, is looking to secure a slice of the biggest toll road project in Sydney, WestConnex, and that has the Australian Consumer and Competition Commission (ACCC) concerned.
The competition watchdog has just issued a preliminary assessment of the proposal by the Transurban-led Sydney Transport Partners to acquire a majority stake in the 33-kilometre, $17 billion motorway, currently under construction under the auspices of the NSW government, which is looking to offload 51% of its stake in the Sydney Motorway Corporation.
At the heart of the ACCC’s concerns is the fact that the $26 billion ASX-listed business already has a near monopoly on toll in Australia, controlling 15 of the country’s 19 toll road concessions including seven of the nine in Sydney, such as the M1, M2, M5 and M7 motorways.
Transurban is currently overseeing the construction of the $3 billion 9-kilometre NorthConnex motorway tunnel, which is due to open next year.
ACCC Chairman Rod Sims said the WestConnex project is so significant it “represents an opportunity to establish a strong rival toll road operator”.
“We consider that Transurban already has significant incumbency advantages when competing for future toll road projects. It has access to highly detailed traffic data when bidding for new roads and is able to leverage its existing toll roads to offer unique unsolicited proposals to state governments,” he said.
“We are concerned that the proposed acquisition may cement Transurban’s advantages when competing for future toll roads.”
The competition chief added that Transurban has already 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,” Sims said.
Selling it to a rival would create greater competition in the future, Sims argues.
The NSW government’s future projects list includes the $14 billion northern beaches tunnel link between Rozelle, in the city’s inner west, and Seaforth, above the heavily congested Spit Bridge.
“Those two players would likely compete strongly for future toll road projects and vie for government approval for unsolicited road proposals,” Sims said, adding that a lack of competition between toll roads is also a concern.
“We are examining whether motorists in Sydney could switch between existing Transurban toll roads and WestConnex roads for certain trips,” he said.
“If there is potential competition between WestConnex and Transurban’s existing toll roads, motorists might lose the benefits from that competition if the acquisition goes ahead. For example, an alternative owner of WestConnex might lower tolls for certain trips, or make changes to its roads or services to ease traffic congestion in attempts to attract more vehicles away from Transurban roads.”
The ACCC will make a final decision on the proposal on July 19 this year and is seeking submissions in response to its statement of issues today by May 31.
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