The ACCC has given the green light to a consortium of super funds to buy Sydney Airport for $ 23.6 billion.
However, the chairman of the competition commission, Rod Sim, used his verdict to attack the way airports in general act as “natural monopolies” which have “significant market power and no price regulation”.
The buyout will become one of the largest in Canadian history and see shareholders pocketing $ 8.75 per share.
“The ACCC accepts that there is minimal potential for competition between airports in relation to certain aeronautical services, for example when an international airline seeks to enter the Australian market or where the airports are located in close proximity to each other. others “, we read in his verdict.
“However, given the minimal level of this potential competition, any lessening of competition from the proposed acquisition would not be substantial.
The ACCC said that during its review process, it consulted with interested stakeholders, including airlines, retail groups, service providers and industry bodies.
He said some of those who have expressed concerns that the purchase could increase the flow of information between commonly owned airports, which could give airports more bargaining power against airlines and airlines. other airport users.
“We understand the concerns of stakeholders, however, fundamentally the lack of competition between airports means that such information sharing between airports would not amount to a substantial decrease in competition, which the law requires before. that we can oppose a merger, âSims said. noted.
The ACCC added that market participants also argued that the current oversight regime is not effective in preventing Sydney Airport from imposing excessive prices.
“The ACCC maintains that the threat of regulation under the current limited oversight regime does not limit the pricing behavior of our airports,” said Sims.
“The absence of coercion ultimately leads consumers to pay higher airport charges than they would otherwise.”
“We will continue to advocate for an effective regulatory regime, especially as the aviation industry and the Australian economy recover from the COVID-19 pandemic,” Sims said.
The deal for Sydney Airport is expected to be finalized in the new year and will require at least 75 percent shareholder approval to proceed.
The board’s decision comes after two previously rejected offers of $ 8.25 and $ 8.45 submitted by the consortium, dubbed the Sydney Aviation Alliance Group (SAA).
Led by IFM Investors, along with QSuper, Global Infrastructure Partners and, more recently, AustralianSuper, the consortium has been planning to secure the sale of the airport since July.
In July, SAA offered a $ 22 billion takeover bid to airport operators, which the board quickly rejected and called “opportunistic.”
The consortium then increased its bid to $ 22.8 billion in August, which was again quickly rejected, prompting super funds to threaten to quit the negotiating table altogether. However, SAA eventually returned with a final offer of $ 23.6 billion, which equates to $ 8.75 per share.
The news comes after Sydney Airport reported a semi-annual loss of $ 97.4 million in the six months leading up to June 30, 2021.
The airport cited the impact of COVID-19 and the sudden closure of internal borders in the second half of the reporting period as it recorded a 33% drop in revenue compared to the same period l last year, which was also heavily affected by COVID. .
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