News, Victoria

Transurban’s hopes of adding another toll road to its belt quashed

The ACCC has opposed Transurban’s EastLink acquisition proposal over concerns such a move could substantially lessen competition for future toll road concessions in Victoria.

Transurban is Australia’s largest toll road operator. In Melbourne, it operates the CityLink toll road and is constructing the West Gate Tunnel toll road, which it will also operate.

Melbourne’s EastLink toll road is operated by Horizon Roads – the only other private toll road operator in Australia.

Another toll road, the North East Link, which is set to be operational by 2028, is still being built but will be operated by the Victorian Government.

According to ACCC chair Gina Cass-Gottlieb, “The proposed acquisition would result in Transurban entrenching its position in Victoria, and prevent the entry of a rival operator which could compete closely for future toll road concessions in Victoria. Transurban would operate every single private-sector controlled toll road in Australia.

A toll road concession refers to the government granting an exclusive right to operate a road and collect tolls for travel on that road. This is done through a long-term concession deed.

EastLink is a 39-kilometre freeway in south-east Melbourne that runs from Mitcham to Frankston. It connects to the Monash, Eastern, Frankston and Peninsula Link freeways.

Cass-Gottlieb said the ACCC had received submissions expressing strong concerns about Transurban’s proposal from stakeholders.

“We also received a submission from the Victorian Government outlining its concerns. The ACCC placed some significance on the concerns expressed by the Victorian Government.

“We have concluded that if Transurban doesn’t acquire Horizon Roads, it would likely be acquired by a potential long-term rival and could be used as a platform to develop the capabilities needed to compete more strongly for other toll road concessions,” Cass-Gottlieb added.

“We therefore found that Transurban acquiring Horizon Roads would likely deter the emergence of a key rival for future toll road concessions.”

The ACCC’s investigation also considered the extent to which the Victorian Government has the ability to constrain Transurban and would be able to level the playing field for future sales of toll road concessions in Victoria.

“We acknowledge that the Victorian Government can run open tender processes, but where one party has material incumbency advantages compared to other firms who may be considering bidding there is less likely to be effective competition for future sale processes,” Ms Cass-Gottlieb said.

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