The Australian Competition and Consumer Commission has released draft determinations proposing to grant exemptions for Emerald’s Melbourne Port Terminal (MPT) and GrainCorp’s Geelong terminal under the mandatory wheat code.
At this time, however, the ACCC proposes to not grant an exemption to GrainCorp’s Portland port terminal.
The Code, which commenced on 30 September 2014, regulates bulk wheat port terminal service providers to ensure that exporters have fair and transparent access to terminal facilities. Where appropriate, the ACCC may reduce regulation at a specific port terminal by exempting the relevant port terminal service provider from certain provisions of the Code.
“The ACCC’s draft view is that there is sufficient competition between Emerald’s MPT and GrainCorp’s Geelong port terminal,” ACCC Chairman Rod Sims said.
The ACCC considered the way in which these port terminals compete for bulk wheat volumes and examined the catchment areas that supply grain to each of the terminals. The ACCC also considered the level of competition in services across the supply chain.
Emerald’s MPT and GrainCorp’s Geelong port terminal compete for grain from very similar catchment areas in Victoria and southern NSW. The degree of spare export capacity at these terminals and the significant container grain exports from the Port of Melbourne place further competitive pressures on these two terminals.
“The ACCC has therefore made a draft determination that the full application of the Code is no longer required at Emerald’s MPT and GrainCorp’s Geelong terminal,” Mr Sims said.
However, the ACCC’s analysis indicates that GrainCorp’s Portland terminal faces less competitive constraint as there do not appear to be sufficient alternative export options for marketers, particularly from western Victoria. While some marketers may export through a port other than Portland, evidence suggests that the transport costs to do so are likely to be substantial for a number of marketers.
“Granting an exemption for GrainCorp’s Portland terminal at this time would not be appropriate as the ACCC’s preliminary findings indicate there are limited competitive pressures to constrain GrainCorp’s market power at the port,” Mr Sims said.
Late last year, the ACCC received exemption applications in relation to Emerald‘s MPT and GrainCorp’s terminals at Geelong and Portland. The port operators submitted that these Victorian terminals compete against each other and face additional competitive constraints from the domestic market, container exports, and new port developments in Victoria.
The ACCC’s complete draft assessments of the three Victorian ports are available at Victorian wheat ports exemption assessments.
If the ACCC grants exemptions for Emerald’s MPT and GrainCorp’s Geelong facility, the port operators will not be subject to a number of the Code’s provisions at these ports, including a non-discrimination requirement, dispute resolution processes, ACCC approval of capacity allocation systems, and certain reporting requirements. Exempt service providers are still required to deal with exporters in good faith and publish a port loading statement and loading procedures.
The ACCC invites submissions from interested parties on its draft determinations. The closing date for submissions is Friday 24 April 2015.