The Australian Competition and Consumer Commission has released a draft decision to not accept Viterra’s proposal to introduce long term agreements.
“The ACCC’s view is that, on balance, the current proposal is not acceptable in its present form,” ACCC Commissioner Cristina Cifuentes said.
The ACCC notes that the concept of long term agreements has broad support amongst exporter stakeholders. The ACCC considers that there are potential benefits in the long term agreement proposed by Viterra, if capacity is allocated in a way that balances the interests of all stakeholders.
However, the ACCC is concerned that under the current proposal Viterra has considerable discretion in relation to the allocation of long term capacity in the event of oversubscription. Viterra would have the ability and incentive to favour its own trading arm, Glencore, in any such allocation. The ACCC is also concerned that the proposal would appear to give a small number of large exporters an advantageous position in the allocation of long term capacity.
The ACCC recognises that this draft decision, if confirmed in a final decision, would mean that Viterra would need to revert to auction for at least the first part of the 2015-16 season, and that this may have little support from exporters.
“The ACCC will consider its final decision in light of the feedback it receives from stakeholders to this draft decision,” Commissioner Cifuentes said.
“The ACCC also may accept an amended proposal from Viterra that adequately addresses the concerns raised by the ACCC in the draft decision.”
The ACCC’s complete assessment of the Viterra proposal is set out at: Viterra 2015
Call for submissions
The ACCC is seeking public submissions from stakeholders on its draft decision to not approve Viterra’s revised proposed long term capacity allocation system. Submissions must be received before 5:00pm (AEST), 31 July 2015.
Submissions can be sent to: transport@accc.gov.au
Background
Under the Port Terminal Access (Bulk Wheat) Code of Conduct (the Code), the ACCC has made a draft decision to not approve Viterra Operations Limited’s (Viterra) application to introduce long term agreements for the allocation of port capacity at its six South Australian wheat ports.
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.
Viterra submitted its application to vary the capacity allocation system in its port loading protocol to introduce long term agreements on 12 March 2015. The proposed capacity allocation system would replace its current capacity allocation system that uses an auction as its primary allocation method, with a first-in-first-served (FIFS) allocation method for capacity not allocated in the auction.
Following the release of the ACCC’s issues paper on Viterra’s proposal, and the provision of submissions in response, Viterra provided a revised set of protocols on 12 June 2015.