The Transurban Group (ASX: TCL) share price is grinding lower on Thursday following a decision from the Australian Competition and Consumer Commission (ACCC).
In the first hour of trade, shares in the toll operator were down 2.7% to $12.78. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is only 0.68% lower compared to yesterday.
Here's why investors are walking away.
Competition watchdog says no deal
Today, Australia's largest toll road operator has been confronted with a roadblock as the ACCC provides its ruling on Transurban's proposed majority interest in Horizon Roads Pty Ltd.
The competition regulator opposed Transurban's plans to acquire a controlling stake in Horizon Roads, determining the transaction would likely reduce competition for future toll road concessions in Victoria.
Investors might be concerned about what this means for future growth potential at Transurban, weighing on its share price.
Horizon Roads operates Melbourne's EastLink toll road, a 39km stretch of the M3 freeway connecting eastern and south-eastern suburbs of Australia's cultural melting pot.
Transurban already operates toll roads in the cultural capital. As it stands, the ASX-listed company owns CityLink and is in the process of constructing the West Gate Tunnel, a $10.2 billion development linking Yarraville, the Port of Melbourne, and Docklands.
In a media release, ACCC chair Gina Cass-Gottlieb elaborated on the justification, stating:
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.
Furthermore, Cass-Gottlieb noted the ACCC had taken into account "strong concerns" expressed by the Victorian Government.
The decision was supported by the possibility of Horizon Roads being acquired by a potential long-term rival. An outcome that would force industry participants to compete more strongly for other toll road concessions.
The response prior to a falling Transurban share price
Before Transurban shares began swapping hands, the company addressed the verdict with an announcement.
In the release, the toll road operator acknowledged the ruling with disappointment. However, management disagreed that the proposed acquisition would lessen competition.
As a result, all options are being considered by the $40 billion company. The company highlighted that the decision was limited to EastLink. This might suggest other transactions are being considered.
Today's negative move puts the Transurban share price in the red compared to a year ago.