The Australian Competition and Consumer Commission has issued a draft determination proposing to grant conditional authorisation to a group of junior iron ore producers to collectively bargain for rail haulage services and rail track access in the Pilbara region of Western Australia.
Authorisation is sought by NWIOA Ops Pty Ltd (North West Iron Ore Alliance) which represents iron ore producers Atlas Iron Limited, Brockman Resources Limited and FerrAus Limited.
The proposed arrangement allows NWIOA and others who approach NWIOA (who do not own or operate rail infrastructure) to collectively negotiate on the terms and conditions, including price.
NWIOA seeks to engage in collective negotiations with BHP Billiton, Rio Tinto, Fortescue Metals Group and any similar provider in future (known as the service providers).
"The ACCC considers that collective negotiations are likely to result in some transaction costs savings compared to a situation where the producers seek to negotiate individually with the service providers," ACCC chairman Graeme Samuel said.
Participation is voluntary for both iron ore producers and the service providers.
To enable the ACCC's assessment of the continuing competitive impact of the proposed arrangements, the ACCC intends to grant authorisation subject to conditions to ensure it is kept informed of changes to the parties involved.
Collective bargaining refers to competitors collectively negotiating terms and conditions with a supplier or customer. Without authorisation, it can raise concerns under the competition provisions of the Trade Practices Act 1974. Broadly, the ACCC may grant authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.
The ACCC's draft determination will be available from the ACCC website (www.accc.gov.au/AuthorisationsRegister) and by following the links to this matter.
The ACCC invites submissions from interested parties in relation to the draft determination before it makes its final decision. Submissions should be received by 19 March 2010. Please refer to the website for further information about making a submission.