Australian Amalgamated Terminals Pty Ltd - s.87B undertaking

Company or individual details

  • Australian Amalgamated Terminals Pty Ltd
    098 458 229
  • Qube Holdings Limited
    149 723 053

Undertaking

On 24 November 2016, the ACCC announced it had accepted an undertaking (the Undertaking) from Australian Amalgamated Terminals Pty Ltd (AAT) and Qube Holdings limited (Qube) in relation to Qube’s proposed acquisition of a 50 per cent shareholding in AAT held by a Brookfield-led Consortium (the Proposed Acquisition).

Prior to the Proposed Acquisition, AAT was a 50/50 joint venture between Qube and the Brookfield-led consortium. The operation of AAT was subject to an ACCC authorisation granted in December 2009 (the Authorisation). The Authorisation restricted AAT from discriminating against non-shareholder suppliers of stevedoring and PDI services, including new entrants. The Proposed Acquisition would result in Qube holding 100 per cent of AAT, and in AAT no longer needing to comply with the conditions of the Authorisation.

AAT is vertically integrated with Qube’s downstream stevedoring and pre-delivery inspection services (PDI) businesses at the Port of Brisbane, Port Kembla, Port Adelaide and Port of Melbourne.

The ACCC considered that in the absence of the Undertaking, the Proposed Acquisition would be likely to substantially lessen competition, including by:

  1. AAT possibly discriminating between terminal users, for example by agreeing to supply certain port services to Qube's downstream businesses on better terms or prices than it does to third parties
  2. AAT possibly foreclosing entry and expansion of third party stevedores or PDI operators, for example by setting higher prices for terminal services
  3. Qube possibly having access to commercially sensitive information provided to AAT by terminal users, shipping lines and car manufacturers and using it to favour its own downstream businesses

The objective of the Undertaking is to address the ACCC's competition concerns which would otherwise arise as a consequence of the Proposed Acquisition. The Undertaking aims to achieve this objective by:

  1. requiring AAT not to discriminate between terminal users, (including discriminating in favour of a Qube related entity), and requiring AAT and Qube not to engage in conduct for the purposes of preventing or hindering access to terminals by terminal users (which includes prospective users). To ensure AAT does not discriminate in this way, AAT must:
    1. comply with open access conditions, and
    2. comply with berthing allocation rules
    1. requiring AAT to facilitate access by PDI operators to the Automotive Flyover at the Port of Brisbane

    2. requiring AAT to ring fence confidential information of terminal users and parties who have applied to become terminal users, and requiring AAT and Qube to maintain controls to ensure that confidential information is not disclosed to unauthorised personnel, which includes related bodies corporate of AAT except in limited circumstances

    3. requiring AAT to comply with a price dispute resolution process, which includes the appointment of an ACCC approved independent price expert, and requiring AAT and Qube to comply with a non-price dispute resolution process;

    4. providing for the effective oversight of Qube and AAT’s compliance with the Undertaking, including an obligation which requires AAT to provide for a compliance audit by an ACCC approved independent auditor at the request of a terminal user at anytime, and

    5. providing for regular reviews of the Undertaking to ensure that the Undertaking continues to meet its objective.

    UPDATE: The original berthing allocation rules were inadvertently omitted from Schedule 2 of the Undertaking published on the ACCC’s undertakings register in November 2016. The attached new version of the Undertaking includes the berthing allocation rules that were in place at the time the Undertaking was signed. No other changes to the Undertaking have been made. For current berthing allocation rules please visit AAT’s website www.aat.auz.biz.

    Waiver

    Limited waiver (clause 6.4(a) - Ring Fenced Personnel) - on 26 March 2018, the ACCC granted AAT and Qube a limited waiver of clause 6.4(a) of the Undertaking to permit AAT Managing Director, Antony Perkins, to assist Qube in the development of the rail operations at the Moorebank Intermodal (port shuttle) and Interstate rail terminal at Moorebank for two years. The limited waiver is subject to the condition that Mr Perkins provides details of his role with Qube and any breaches or potential breaches of clause 6 of the Undertaking to the ACCC and independent auditor in accordance with clause 8(a) of the Undertaking. AAT and Qube remain subject to the confidentiality obligations in clause 6 of the Undertaking.

    2018 variations

    On 25 June 2018, the ACCC consented to a Variation to the section 87B Undertaking given by Australian Amalgamated Terminals Pty Ltd (AAT) and Qube Holdings Limited (Qube) and accepted by the ACCC on 23 November 2016 (the Undertaking) (the Variation).

    2018 Variations for the Melbourne Terminal

    As of 1 January 2018, AAT no longer operates automotive and/or RoRo terminals at Webb Dock West or Appleton Dock in Victoria.  The automotive and RoRo terminal at Webb Dock West is now operated by Melbourne International RoRo & Auto Terminal Pty Ltd, which is the subject of a separate section 87B undertaking.  However, pursuant to arrangements made by AAT and the Port of Melbourne, AAT now operates a general cargo terminal at Appleton Dock (which may include other cargo from time to time) (the Melbourne Terminal).

    AAT states it is seeking to grow its general cargo business at the Melbourne Terminal, by offering more flexible terms to shipping lines than is currently permitted by the Undertaking.  AAT asserts it is competing with the Port of Geelong for such business and therefore a number of the obligations in the Undertaking should not apply or should be varied to enable AAT to compete effectively with the Port of Geelong and to reduce the compliance burden on AAT as it is building its business.

    In light of these changes, AAT and Qube sought the ACCC’s consent to vary the following clauses in the Undertaking in relation to the Melbourne Terminal for a three year period:

    1. inserting clause 5(c), which provides that where AAT offers services directly to a shipping line (as opposed to Terminal Users), the obligation to comply with the open access conditions are removed provided any terms or conditions are not subject to the relevant shipping line using Qube or a Qube Related Entity or have the effect of the shipping line only being able to engage Qube or a Qube Related Entity;
    2. excluding the application of clause 8.1 (General Compliance Reporting) and Schedule 3, and replacing it with a simplified compliance reporting regime in clause 8.2;
    3. inserting clause 9.11, which excludes Independent Audits except where directed by the ACCC;
    4. inserting clause 10.6, which excludes the operation of the Price Dispute Resolution Process; and
    5. inserting clause 11.2(d), which excludes ad hoc independent audits except where directed by the ACCC.
    6. AAT has included new Berthing Allocation Rules for the Melbourne Terminal, which largely replicates the earlier rules that ceased to be in effect after AAT ceased to operate automotive terminals at Webb Dock West and Appleton Dock - available at www.aat.auz.biz. 

    At the end of the limited time period, the variation will automatically lapse and the undertaking will come into full effect unless the ACCC consents to a further variation.

    ACCC’s competition concerns

    The ACCC accepts that AAT is developing its general cargo business at the Melbourne Terminal and that it may compete from time to time with the Port of Geelong for general cargo.  The ACCC notes that market feedback on competition between the two ports for general cargo was mixed.

    However, the ACCC’s competition concerns about AAT or Qube (or Qube Related Entities) having the ability to discriminate in favour of Qube's downstream businesses or to otherwise engage in conduct for the purposes of preventing or hindering access to the Melbourne Terminal by Terminal Users (which includes Applicants) remain. The concerns relate to the markets for the supply of automotive stevedoring, the supply of PDI services, and the supply of general cargo stevedoring services.

    The objective of these variations to the Undertaking in respect of the Melbourne Terminal is to provide AAT with a specified period of three years to build its general cargo business at Appleton Dock. The amendments aim to achieve this objective by:

    1. allowing AAT to offer directly to or otherwise agree with shipping lines more flexible terms, provided certain conditions in clause 5(c) are met; and
    2. minimising compliance costs for AAT during the relevant period while ensuring that AAT, Qube, and Qube Related Entities continue to be bound by the obligations regarding non-discrimination and prevention or hindering of access to the Melbourne Terminal by Terminal Users.

    2018 Variations for Berthing Allocation Rules and the Price Dispute Resolution Process

    AAT and Qube have also sought to simplify the process for amending Berthing Allocation Rules that would apply at all AAT Terminals, where those amendments are initiated by AAT (clause 7.2), as opposed to variations by the Harbour Master of the Port which remain covered by clause 7.3.

    In addition, AAT and Qube have sought to vary the process and timing (but not the length of time) contained in clause 7 of Schedule 1 and the Price Dispute Resolution Process in Schedule 5, to provide greater certainty that Charges will take effect from 1 July each Financial Year.

    In considering the proposed variations, the ACCC conducted market inquiries with terminal users, the Port of Melbourne and other interested parties.