The Spirit Super Palisade Consortium’s plan to acquire the port, Victoria’s second-largest, from Brookfield and State Super was dropped after the Australian Competition and Consumer Commission said it still had competition concerns about the acquisition.

“The Spirit Super and Palisade Investment Partners Consortium (the Consortium) has withdrawn its request for merger clearance from the ACCC for its proposed acquisition of the Port of Geelong. The ACCC recently informed the Consortium that it continued to hold preliminary competition concerns needing more time to investigate and the Consortium subsequently decided to not proceed with the transaction,” the ACCC said Friday.

Under the acquisition, Spirit Super would hold a 51 per cent stake in the Port of Geelong, while funds managed by Palisade would hold the remaining stake.

In a statement of issues released March 31, the ACCC expressed concerns the deal could harm competition in the state’s market for port services for bulk cargo such as fertiliser, mineral sands and timber, steel and windfarm equipment because it would lead to minority common ownership between the Port of Geelong and Port of Portland, a competing bulk commodity port in South-west Victoria.

Investors in one of Palisade’s funds involved in the Geelong port deal, the Diversified Infrastructure Fund, also own and operate the Port of Portland.

In March, ACCC commissioner Stephen Ridgeway said some market plays had voiced “strong concerns” about the impact the deal could have on prices and terms for port services.

“For future large port users, there are very few bulk port options in Victoria. Between them, the Port of Geelong and Port of Portland handle over half of Victoria’s bulk cargo. This market structure is unlikely to change in the foreseeable future,” Ridgeway said.

“While the acquisition would not provide Palisade with outright control of Port of Geelong, it would obtain a degree of influence over the Port of Geelong.”

“In addition, common ownership could lessen the incentives for the Port of Portland to compete for customers through existing facilities and future investments in infrastructure.”

Ridgeway said the Victorian ports also compete to attract certain dry bulk and break-bulk throughput, in particular from the western part of the state.

“Ports play a critical role in the movement of goods in Australia’s economy and there is some ability for major port users to choose between the Port of Geelong and Port of Portland when making very substantial infrastructure investments at the ports.”

“Any substantial lessening of competition between ports therefore has the potential for significant negative impacts on a range of industries.”

In announcing the transaction in January, Spirit Super CIO Ross Barry and Palisade CEO Roger Lloyd highlighted the consortium’s familiarity with the sector and the Port of Geelong’s growth potential.

“GeelongPort is a compelling, core infrastructure opportunity in a sector well known to the Consortium and reflects our continued commitment to invest in regional Australia, support regional business and strengthen regional communities,” Barry said.

“GeelongPort’s diversified trade profile, strategic location and growth potential align with Palisade’s investment philosophy of investing in high quality infrastructure assets with stable and predictable income streams,” Lloyd said.

Palisade executive director Alastair Pollock said the company was confident the acquisition would receive regulatory approval.

“We are continuing to work with the ACCC on their process and remain confident that the transaction will be cleared. Given the ACCC process is ongoing, I won’t comment further at this time,” Pollock said.

Last year, the ACCC lost a high-profile fight with NSW Ports over what it called an anti-competitive 50-year agreement with the state signed when Port Botany and Port Kembla were privatised in 2013.

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