ACCC proposes to Allow BHP Joint Venture in the Pilbara Region

The Australian Competition and Consumer Commission has issued a draft determination proposing to grant authorisation* to the parties to a joint venture (managed by BHP Billiton) that will develop an emerging field of iron ore mining, ACCC Chairman, Professor Allan Fels, said today.

The POSMAC joint venture will develop Mining Area C in the Pilbara region, for the purposes of mining iron ore that is primarily destined for the export market. The parties to the joint venture are seeking to mine Marra Mamba iron ore, a type of iron ore that is relatively new to the world market.

The ACCC proposes to authorise the making of and giving effect to agreements between the joint venture participants, and some conduct flowing from these agreements, for the purposes of establishing and operating the Joint Venture. Absent authorisation, these agreements and conduct may have raised concerns under the competition provisions of the Trade Practices Act 1974.

"The ACCC believes that there are likely to be significant public benefits as a result of the joint venture", Professor Fels said. "In particular, the joint venture is likely to increase exports, assist in the development of this area of the Australian mining industry, provide financial benefits to the Western Australian and Commonwealth governments and boost the economy of the Pilbara region.

"The ACCC believes that these public benefits arising from the proposed joint venture will outweigh any anti-competitive effect, which is likely to be effectively limited to the export rather than the domestic market.

"The ACCC has accepted BHP's assertion that without authorisation, the joint venture is unlikely to proceed and Mining Area C is unlikely to be developed in the foreseeable future".

Before the ACCC issues its final determination, interested parties who are dissatisfied with the ACCC's draft determination can request a public conference to discuss the operation and effect of the draft determination or make an additional submission. Interested parties wishing to make a submission in relation to the draft determination should address their submission to: The General Manager, Adjudication Branch, ACCC, PO Box 1199, Dickson ACT 2601 or adjudication@accc.gov.au

Background

* The Trade Practices Act 1974 prohibits competitors agreeing to work together in a way that substantially reduces competition between them. Authorisation provides immunity from court action arising from such agreements but can only be granted where the ACCC is satisfied that the public benefit arising from the conduct outweighs any public detriment.