Viterra (AusBulk/ABB Grain Ltd)

ACCC decision to withdraw its Auction Objection Notice

The ACCC decided on 5 September 2012 to withdraw the Auction Objection Notice issued to Viterra on 11 April 2012 in response to its Auction Variation Notice.

The reasons for its decision are set out in the ACCC’s decision document which is available below.

Viterra’s Revised Variation Notice

On 24 August 2012, Viterra submitted its Revised Variation Notice pursuant to clause 9.6(f)(ii) of its 2011 Undertaking.  A copy of the Revised Variation Notice is below.

As the Revised Variation Notice is substantially the same as the revised proposed auction system provided to the ACCC on 12 July 2012, and subject to industry consultation between 20 July 2012 and 3 August 2012, the ACCC does not propose consulting on the Revised Variation Notice.  Differences between the revised proposed auction system and the Revised Variation Notice are:

• Modification of the rebate factor formula at clause 4 of schedule 2 of the Port Loading Protocols.  The effect of the modification is to clarify that the rebate is weighted to the undersubscribed slots based on the proportion of capacity by which it is undersubscribed rather than the number of auction rounds.  A consequential change has also been made to the first line of clause 4 of schedule 2 by replacing the words ‘Weighted Capacity_p’ with ‘Weighted Volume_p’.
• The insertion of the following sentences into clause 1 of schedule 2 of the Port Loading Protocols for clarity “When the Weighted Volume equals zero, the Rebate per Tonne is zero for all Slots.  In addition, if the Rebate per Tonne for all Slots is zero, the Rebate Pool will be distributed equally across all tonnes acquired at Auction in respect of the relevant Port Terminal (and which are actually shipped), and will be rebated to Clients on that basis.”
• Extending the time frame in clause 1(c)(ii) of the transitional provisions in schedule 3 of the Port Loading Protocols from 5 business days to 12 business days.
• The insertion of clause 1(e) of schedule 3 of the Port Loading Protocols.  The effect of which is to ensure that Viterra will comply with clause 1(b) and 1(c) of the transitional provisions after the provisions become effective in the event that it hasn’t already done so.

In determining whether to withdraw the Auction Objection Notice, the ACCC will consider submissions received on the revised proposed auction system so far as they are relevant. 

Clause 9.6(f)(iii) of Viterra’s 2011 Undertaking provides that the ACCC will advise Viterra within 30 business days of receipt of the Revised Variation Notice, of its decision as to whether it will withdraw its Auction Objection Notice. The ACCC will now proceed to make its final decision.

Consultation on Viterra’s revised proposed auction system

The ACCC is conducting public consultation as part of its informal assessment of Viterra’s revised proposed auction system. The ACCC invites industry and interested stakeholders to make submissions by 5:00pm on 3 August 2012. Details of the proposal and how to make a submission are set out in the ACCC’s consultation paper available below.

In brief, the proposed changes include inter alia:

• changes to the way auction proceeds are rebated to exporters:
• modifications to the rebate formula that allocate a greater proportion of the auction proceeds to lower demanded shipping slots
• an annualised rebate pool
• a separate rebate pool for each port terminal
• limiting the quantity of capacity that an exporter is able to withdraw per round during the auction
• changes to the FIFS system that create uncertainty regarding the ability to acquire capacity through the FIFS system in order to incentivise exporters to participate in the auction

The draft revised proposal that industry has previously commented on during joint ACCC and Viterra consultation is available below.

Decision to consent to Viterra’s application to vary its 2011 Port Terminal Services Access Undertaking

On 9 May 2012 the ACCC made the decision, following consultation with stakeholders, to consent to Viterra’s application to vary its 2011 Port Terminal Services Access Undertaking.  Specifically to vary clause 9.6 of its 2011 Undertaking.

In brief, the proposed variations:

• Extend the timeframes in which Viterra must lodge a Revised Variation Notice.  This will allow Viterra additional time to work with industry and the ACCC to develop an efficient auction system
• Extend the final date by which Viterra must introduce an auction system (thereby delaying the operation on the prohibition on Viterra providing port terminal services to its own trading arm)
• make arrangements for Viterra to open the shipping stem in mid August to all exporters (including its own trading arm) on a first-in, first-served (FIFS) basis to allocate capacity for the period 1 October – 31 January, and for the operation of the FIFS system to be extended further if necessary
• more flexibility—for both Viterra and the ACCC to agree to extend timeframes; and for the ACCC to withdraw its objection notice.
  

The ACCC reasons for its decision are available below.

Application to Vary 2011 Undertaking

Viterra Operations Ltd has made an application under section 44ZZA(7) of the Competition and Consumer Act to vary its 2011 Undertaking.

The proposed variation extends the timeframe by which Viterra must introduce an auction system, provides the ACCC with greater flexibility in its ability to withdraw an Auction Variation Notice, and includes arrangements for reopening the shipping stem for the 2012-2013 export season if an auction system has not yet been introduced.

The ACCC invites industry and interested stakeholders to make submissions by 7 May 2012. The application with tracked changes to the Undertaking is available below.

Viterra's proposed auction system

Pursuant to clause 9.5 of its 2011 Undertaking, Viterra must vary its Port Loading Protocols and/or Standard Terms to introduce an auction system for the allocation of port terminal capacity. Details of Viterra's proposed auction system are set out in Viterra's Auction Variation Notice. Viterra also provided a submission accompanying the auction variation notice.

The variation process in the 2011 Undertaking gives the ACCC the ability to object to all or any of the proposed variations having regard to a range of matters listed in the Undertaking. The ACCC issued an Objection Notice on 11 April 2012.

Consultation Process

In considering the proposed auction system the ACCC conducted a public consultation process seeking views from industry and interested stakeholders. The consultation process was completed on 28 February 2012. The consultation paper, stakeholder submissions and Viterra’s submissions are available below.

Viterra Operations Limited Access Undertaking 2011

On 22 September 2011, Viterra submitted an Access Undertaking (the 2011 Undertaking) to the ACCC for assessment under section 44ZZA of the Competition and Consumer Act 2010 (Cth) (CCA).

Please note that the 2011 Undertaking was varied in May 2012. The varied 2011 undertaking is available above.

On 28 September 2011 the ACCC accepted, pursuant to Division 6 of Part IIIA of the CCA, the 2011 Undertaking provided to the ACCC by Viterra on 22 September 2011. The 2011 Undertaking relates to the provision of access to port terminal services to accredited wheat exporters for purposes realting to the export of bulk wheat. The ACCC published the reasons for its decision in the Decision to Accept the 2011 Undertaking available below.

ACCC's Assessment of Viterra's 2011 Undertaking

Documents relevant to the ACCC's assessment of Viterra's 2011 Undertaking can be found at the following page.

Viterra's 2009 Undertaking

Viterra's 2009 Undertaking and documents relevant to the ACCC's assessment are found on the following page.