Hopes of Newcastle hosting NSW's second container port any time soon are speculative, far-fetched and fanciful, says a judge deciding a major competition case.
Justice Jayne Jagot in June dismissed allegations that the NSW government and the owners of its largest ports had signed anti-competitive and illegal contracts.
The 2013 and 2014 agreements effectively require the Port of Newcastle to compensate the owner of Sydney's Port Botany if container cargo starts to be diverted to NSW's second-largest city.
The competition watchdog had alleged the compensation due was so high, it was uneconomical for Newcastle to compete with Botany, breaching competition laws.
But substantially lessening competition wasn't the purpose of the compensation provisions, nor their likely future effect, the Federal Court judge said.
Rather, Botany wouldn't reach capacity for decades and Newcastle was speculating that it could convince the NSW government to shaft its current outlook to make Port Kembla the city's second container terminal, she said.
Newcastle was also hoping it might satisfy its shareholders a future Newcastle container terminal could be viable despite Botany's spare capacity.
"These mere speculative hopes were and remain far-fetched and fanciful on the evidence, and were and are not a real chance or real possibility," Justice Jagot said in written reasons published on Tuesday.
"As such, there was and is not any credible threat of entry by (Port of Newcastle) into the pleaded market for Container Port Services in NSW."
The owner of Botany also had the benefit of "derivative Crown immunity" regarding compensation provisions and thus couldn't be prosecuted for alleged cartel conduct, the judge ruled.
Newcastle is the world's largest coal export port and the country's third-largest port by volume.
But it handles few containers, lacking the specialist equipment that allows Port Botany to handle 2.7 million standard container units each year.
Botany, which has a capacity of about seven million containers annually, and Kembla, which primarily handles imported vehicles, grain and other bulk cargo, are both owned by NSW Ports, a consortium of industry superannuation funds.
NSW Ports chief executive Marika Calfas said the decision was "an emphatic win" for it and the people of NSW.
Premature development of another container terminal in NSW while Port Botany had capacity would increase freight costs to the detriment of the state's economy, she said.
The ACCC in June said the judgment provided an "enormous hurdle" for Newcastle to develop a container terminal and confirmed NSW Ports' "effective monopoly" in moving containers in NSW.
Australian Associated Press