IFM confident Sydney Airport acquisition doesn’t break anti-trust laws

IFM Investors, which represents 23 industry superannuation funds, is confident its potential acquisition of Sydney Airport will not break anti-trust laws.

As part of the Sydney Aviation Alliance consortium, it had been granted due diligence after presenting a third non-binding proposal to acquire all shares in Sydney Airport.

IFM had holdings in Melbourne and Brisbane airports and the Airports Act 1996 was legislated to ensure diversity of ownership and control of certain major airports.

Asked by Economics Committee chair Tim Wilson if they were confident they would get approval from the Australian Competition and Consumer Commission (ACCC), David Neal, IFM chief executive, said they complied with the requirements of the act.

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“I am very confident our structure is compliant with all applicable laws, we wouldn’t have gone through all of this otherwise,” Neal said.

“The composition of our bid complies [but] that’s obviously a matter for the ACCC and they’ll opine on that.”

This issue had been brought up during the common ownership enquiry, and broadly-speaking Neal said the regulators had concluded there was no evidence to act.

“I am aware some people have drawn conclusions and there has been research that has drawn a link,” Neal said.

“When regulators have looked at that evidence and research, they have not found any evidence that common ownership has caused anti-competitive outcomes.

“A lot of their research there has been a lot of assumptions underlying that research that have been questioned.”

Another issue raised during the common ownership enquiry was over transparency of the value of holdings, which IFM said was not in the best interests of super fund members.

“I start from the position of being supportive of transparency but you have to understand the costs of that,” Neal said.

“It’s essentially the members own information about the assets you’re giving and you’re giving it to the market and the markets job is to get the best value out of you as they can.”

Neal, who spent almost 13 years at the Future Fund which included a tenure as CEO before joining IFM Investors last year, lobbied to prevent the Future Fund from having disclosure market information.

“We had this conversation at the Future Fund a lot with the Government when I was there and I argued long and hard for the for the Freedom of Information Act (FOI) to be changed so the Future Fund wasn’t at risk of having to disclose that information,” Neal said.

“It’s not in the interest of the taxpayer for the Future Fund to be forced to disclose the value of their investments and that’s I we wanted the FOI rules to be changed.

“Transparency is good but if it creates an adverse outcome – in the case for the taxpayer with the Future Fund or in my case super fund members – then we clearly need to be careful with that.”