The Australian Competition and Consumer Commission has released a position paper confirming that it intends to grant exemptions to GrainCorp and Quattro from having to comply with Parts 3 to 6 of the Wheat Code at their respective Port Kembla terminal facilities.
These exemption determinations will be made when Quattro’s facility, which is in the final stages of development, is complete. Until then, GrainCorp will remain subject to the full set of Code provisions.
“The ACCC considers that there will be a sufficient level of competition at Port Kembla once Quattro becomes operational to warrant granting an exemption to both Quattro and GrainCorp,” ACCC Commissioner Cristina Cifuentes said.
“With the entry of Quattro, exporters are likely to be able to negotiate fair and transparent access to port terminal services at Port Kembla in the absence of full regulation.”
The ACCC’s final position follows public consultation on draft decisions to exempt the two Port Kembla facilities.
“The ACCC remains of the view in its draft decisions that there will likely be a significant amount of spare capacity across GrainCorp and Quattro’s facilities, and that both port operators will have strong commercial incentives to attract third-party exporters to use their facilities. GrainCorp and Quattro will compete with each other and to some degree also with the container export market for wheat,” Ms Cifuentes said.
Consistent with its approach to exemptions at other ports, the ACCC will undertake monitoring of the two Port Kembla bulk wheat terminals and the level of competition following the exemptions.
The ACCC has considered NSW Farmers’ request that the ACCC undertake price monitoring. The ACCC does not have a formal direction to request cost information and monitor prices for bulk wheat port terminal services under Part VIIA of the Competition and Consumer Act, as is the case in other industries. However, the Code requires that all port terminal service providers publish reference prices.
“The ACCC intends to monitor trends in these prices for both exempt and non-exempt ports as part of its general industry monitoring,” Ms Cifuentes said.
The ACCC is also separately considering the recent fee changes by GrainCorp at its up-country storage and handling facilities. These fee changes were raised by Quattro in a public submission. The changes include an additional outturn fee where grain is delivered by rail to a third party port (such as Quattro’s). GrainCorp’s up-country fees are not covered by the Code, which regulates access to port terminal services.
“Granting an exemption will not change GrainCorp’s ability to charge particular fees at its up-country facilities. The ACCC will be looking at these fee changes as a separate issue to the exemption, which is based on the competition GrainCorp faces at port,” Ms Cifuentes said.
The ACCC’s assessment process and reasons for intending to exempt GrainCorp and Quattro at their respective Port Kembla facilities are set out in its final position paper, available at http://www.accc.gov.au/regulated-infrastructure/wheat-export/wheat-export-projects/port-kembla-wheat-ports-exemption-assessments.
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.
As a result of the planned exemptions, Quattro and GrainCorp will not be subject to a number of the Code’s provisions at their respective Port Kembla facilities, including obligations to provide non-discriminatory access, resolve access disputes through prescribed processes, get ACCC approval for capacity allocation systems and publish certain information.
Exempt service providers are still obliged to deal with exporters in good faith and publish information about how capacity is allocated and the current state of the shipping stem.
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