ACCC acknowledges GrainCorp’s removal of outload fee surcharge

20 December 2016

The Australian Competition and Consumer Commission has ended its investigation into a surcharge formerly imposed by GrainCorp upon customers for outloading grain delivered by rail from its upcountry storage and handling facilities to rival port terminals.

The ACCC had been investigating whether the imposition of the surcharge increased the cost of sending grain to wheat ports operated by Graincorp’s rivals and was anti-competitive, after industry participants raised concerns during the ACCC’s exemption assessment process for Port Kembla port terminals.

Given the scale of GrainCorp’s operations, the ACCC was concerned that the surcharge could affect competition along grain supply chains, particularly at a time when new entrants are establishing their facilities at Port Kembla and Newcastle.

GrainCorp removed the $2.50 per tonne surcharge with effect from 1 October 2016.

“The ACCC notes GrainCorp’s decision to remove the surcharge, and therefore does not intend to investigate this issue further,” ACCC Commissioner Mick Keogh said.

“Discriminatory practices by large, vertically integrated organisations have the potential to distort competition in supply chains. The ACCC will continue to monitor the actions of major players in the grains industry, and throughout the agriculture sector, for possible anti-competitive conduct in agricultural supply chains.” 

Background

GrainCorp operates the largest network of grain port terminals and upcountry storage and handling facilities on the East Coast of Australia.

At the same time as releasing a position paper confirming that the ACCC intended to grant exemptions to GrainCorp and Quattro from having to comply with Parts 3 to 6 of the Wheat Ports Code at Port Kembla, the ACCC announced it would separately consider fees and changes by GrainCorp at its upcountry storage and handling facilities. Concerns about the introduction of the $2.50 surcharge were raised by Quattro during public consultation for the Wheat Ports Code exemption assessment. GrainCorp’s upcountry fees are not covered by the Wheat Ports Code, which regulates access to port terminal services.

The ACCC monitors and enforces compliance with the Wheat Ports Code, and also has certain specific roles in relation to port terminal exemptions and capacity allocation systems. Pursuant to this role, where appropriate the ACCC may also reduce regulation at a specific port terminal by exempting the relevant port terminal service provider from certain provisions of the Code.

The ACCC has also been provided with additional funding of $11.4 million over four years to establish an Agriculture Unit that will conduct investigations in agricultural supply chains and engagement in rural and regional areas.

 

Release number: 
MR 249/16
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