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Horizon Roads Acquisition Proposal Rejected by ACCC

“The proposed acquisition would result in Transurban entrenching its position in Victoria,” said ACCC Chair Gina Cass-Gottlieb.

The Australian Competition and Consumer Commission (ACCC) has blocked a proposal from Transurban, Australia’s largest toll road operator, to acquire a majority stake in Horizon Roads fearing it could potentially lessen competition.

The consumer watchdog said that it prioritised the Victorian government’s submission regarding the proposal.

“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,” ACCC Chair Gina Cass-Gottlieb said.

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Horizon Roads, through ConnectEast, operates the EastLink toll road in Melbourne through a concession agreement valid until November 2043. The 39-kilometer EastLink freeway runs from Mitcham to Frankston and links to the Monash, Eastern, Frankston, and Peninsula Link freeways.

Transurban, on the other hand, operates the CityLink toll road and is building and will operate the West Gate Tunnel toll road. The Victorian government, meanwhile, is set to operate the North East Link toll road, currently being constructed, by 2028.

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

“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,” the ACCC chair said.

Transurban said that it is disappointed with the ACCC’s decision and said the company was confident the acquisition would not lessen competition.

“Transurban is closely reviewing the decision and will consider all the options available to it. Transurban notes that the ACCC’s decision is the result of an informal merger clearance process and not a conclusive finding of law,” the ASX-listed company said in a security filing.

“The decision is limited to Eastlink and does not preclude Transurban from participating in other future development or transaction opportunities including in Victoria.”

In August, Transurban reported a surge in profit to $92 million for fiscal 2023 from $16 million in the previous year. Its toll revenue increased to $2.83 billion from $2.32 billion.

Among the locations where it operates, the company witnessed the highest average daily traffic growth of 24.4 percent in Melbourne. Car traffic rose 30 percent and large vehicle traffic rose by 4.7 percent in the state.

The company has appointed Ms. Michelle Jablko as its new CEO and managing director, effective Oct. 19, 2023, replacing CEO Scott Charlton.

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