ACCC issues draft decision to approve CBH long term arrangements

26 June 2014

The Australian Competition and Consumer Commission has issued a draft decision to accept Co-Operative Bulk Handling Limited’s (CBH) proposed 2014 Port Terminal Services Access Undertaking, subject to drafting amendments. The undertaking would govern access by third party exporters to CBH’s port terminal services for bulk wheat export at CBH’s four port terminals in Western Australia. 

CBH currently allocates port terminal capacity to exporters for one year at a time via annual auction and first-come first served processes. The main change to existing arrangements is that CBH proposes to introduce long term agreements for port terminal capacity. Under the proposal CBH would provide up to 66 per cent of total port terminal capacity to customers who are willing to book a minimum of 600,000 tonnes of capacity per year for three years. The remaining capacity not allocated by long term agreements would be available to all exporters through the existing processes.

The ACCC’s consultation process assessed the commercial benefits of the proposed variations with a particular focus on the impact of smaller exporters who would not meet the minimum capacity thresholds in the proposal. The proposals were broadly supported by stakeholders.

“The ACCC considers that long term agreements can offer benefits to both the port terminal operator and the access seeker, by providing greater certainty to plan long term export programs and assisting supply-chain planning and investment,” ACCC Commissioner Cristina Cifuentes said.

“Importantly, smaller exporters and those who choose not to enter into long term arrangements with CBH are provided for under the proposal. These companies will have access to a minimum 34 per cent of port capacity on an annual basis as they do now,” Ms Cifuentes said.

 “The ACCC considers that CBH’s proposed arrangements appropriately balance the interests of different exporters.”

In addition to the long term arrangements, the proposed undertaking otherwise retains the important features of CBH’s existing undertaking, including a publish-negotiate-arbitrate approach to access, dispute resolution processes, and obligations on CBH not to hinder access to services or to discriminate in favour of its own trading division.

The proposed undertaking would commence after the expiry of CBH’s current undertaking on 30 September 2014 if a mandatory code of conduct governing access to wheat ports is not introduced.

The ACCC has published a draft decision setting out its preliminary views on the proposed undertaking. The ACCC seeks comments on those views and CBH’s proposal by Friday 11 July 2014. The ACCC’s approval is subject to drafting amendments being made by CBH.

The ACCC is assessing CBH’s proposed undertaking in accordance with the criteria in Part IIIA of the Competition and Consumer Act 2010.

The draft decision and other documents relevant to the assessment of the proposed undertaking are available at: Co-operative Bulk Handling 2014.

Release number: 
NR 164/14
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