Port of Newcastle says Botany 'inoculated from competition' for 50 years on second day of ACCC full court appeal to Federal Court

The port's counsel, Garry Rich SC, completed his evidence yesterday afternoon after the Australian Competition and Consumer Commission's barrister, Michael Borsky QC, followed by his junior, barrister Robert Yezerski, finished evidence begun on Thursday.

The ACCC is appealing a decision from June last year by the Federal Court's Justice Jayne Jagot, who found that the relevant federal competition laws did not apply to the NSW government's 99-year lease of Port Botany and Port Kembla, and that NSW Ports, which paid $5.1 billion for the lease in 2013, was protected by "derivative Crown immunity". Justice Jagot also found the PCDs at the heart of the dispute were not "anti-competitive".

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Yesterday's hearing saw the three judges - Federal Court Chief Justice James Allsop, Justice Jonathan Beach and Justice David Yates - repeatedly probing Mr Borsky, and questioning the logic and strength of the ACCC's case.

In 2014, Port of Newcastle paid $1.75 billion for its 98-year lease, accompanied by a PCD requiring it to pay the government a formulated per-container amount if it handled more than a benchmark of 30,000 containers a year.

The state, in turn, would pass that money onto NSW Ports, which had signed its own "compensation" PCD a year before, which promised the state would "make it whole" if it lost business to Newcastle.

The ACCC evidence revolved around the Botany PCD, with the judges - who referred to evidence that NSW Ports did not know about the Newcastle PCD - repeatedly questioning the ACCC's evidence.

Port of Newcastle's counsel however insisted the two deeds were part of a single broader issue, that began when the NSW government announced its intended privatisation of Botany in 2011.

Mr Rich said trial evidence showed that NSW Ports was concerned about the impact of a possible policy change to allow a Newcastle terminal even as it was negotiating to lease Botany and Kembla.

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Mr Rich said the compensation offered was "not merely lost profit or lost revenue" but the full cost of handling each Newcastle container (put at $100 a container in the trial).

A situation where Botany would be "inoculated from harm of competition" from Newcastle for 50 years had to be "less competitive than a market where both can inflict injury on the other".

The case resumes on Monday.

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