The Australian Competition and Consumer Commission has released determinations to exempt Emerald’s Melbourne Port Terminal (MPT) and GrainCorp’s Geelong terminal from certain parts of the mandatory wheat Code.
The ACCC has not determined to exempt GrainCorp’s Portland port terminal at this time.
“The ACCC’s view is that there is sufficient competition between Emerald’s MPT and GrainCorp’s Geelong port terminal to support granting exemptions at this time,” 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. In addition, these two facilities face significant competitive pressure from container wheat exports from the Port of Melbourne, which represent about 30 per cent of wheat grown in Victoria. The ACCC also found that there was a degree of spare bulk export capacity at the Melbourne and Geelong terminals.
“The ACCC has therefore made determinations 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 findings indicate that there are limited competitive pressures to constrain GrainCorp’s market power at the port,” Mr Sims said.
Following these exemption determinations, the ACCC will monitor the Victorian wheat port terminals to continue to assess the level of competition for these facilities into the future.
The ACCC will monitor shipping activity and the market concentration of exporters shipping grain from Emerald’s MPT and GrainCorp’s Geelong terminal. The ACCC would be concerned if there was evidence that Emerald or GrainCorp were taking a much larger or growing proportion of export capacity at their respective ports at the expense of other exporters, which could limit the competition for grain grown by Australian farmers,” Mr Sims said.
The ACCC also proposes to consult with port users and the broader industry to seek information about exporters’ ability to access port terminal services in Victoria following the exemptions.
“The ACCC’s monitoring to assess the effect of the exemptions will help to ensure that outcomes in the industry are consistent with a competitive outcome. The ACCC has the power to revoke exemptions if it finds that the reasons for granting the exemptions no longer apply,” Mr Sims said.
The ACCC’s complete assessments of the three Victorian ports are set out at http://www.accc.gov.au/regulated-infrastructure/wheat-export/victorian-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.
Under the 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 however still required to deal with exporters in good faith and publish a port loading statement and loading procedures.
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