The Australian Competition and Consumer Commission has decided to revoke interim authorisation which was granted in July to allow the applicants to phase in the implementation of a long term solution to ongoing capacity constraints in the Hunter Valley coal chain.
In lodging the current application, Port Waratah Coal Services, Newcastle Coal Infrastructure Group and the Newcastle Port Corporation committed to finalise and execute a suite of legal documents by August 31 2009, which would set out the detailed framework for the long term solution.
Due to concerns over continuing delays in reaching agreement, the ACCC's interim authorisation was subject to a condition that the applicants execute their respective Capacity Framework Documents by August 31 2009.
"Despite the applicants being given six weeks' notice, the ACCC is advised that one party has failed to execute," ACCC chairman Graeme Samuel said today.
The ACCC maintains its view that unnecessary delays in the implementation of a long term commercial framework in the Hunter Valley is likely to lead to significant detriment in the form of forgone coal exports.
Accordingly, the ACCC has decided to revoke interim authorisation, effective immediately.
The ACCC has long recognised that substantial benefits to the industry could be achieved though addressing the ongoing capacity constraints in the Hunter Valley.
To date, the industry, assisted by the NSW Government, has made significant progress and the ACCC understands two of the three applicants were able to meet the deadline. However, there have been numerous delays throughout this process and an apparent inability for all parties to reach agreement.
"It is not appropriate for the authorisation process to be used as a tool to seek to force resolution of commercial negotiations," Mr Samuel said.
It is open for the relevant parties to continue to negotiate any outstanding issues, and to seek interim authorisation again if and when all of the respective Capacity Framework Documents are executed.
The ACCC also notes that the applicants foreshadowed the possibility of varying the current tripartite arrangements if all of the parties failed to execute the relevant documents by the deadline. This would involve some of the parties lodging a new application for authorisation with the ACCC.
While the ACCC considers an industry wide agreement is likely to be the most effective way to achieve a long term solution, it may be that the bulk of the benefits could still be achieved in another way.
Authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment. Interim authorisation allows the parties to engage in the conduct prior to the ACCC considering the substantive merits of the application.
More information regarding the application is available from the ACCC's website: www.accc.gov.au/AuthorisationsRegister.