The Australian Competition and Consumer Commission has released draft decisions proposing to exempt GrainCorp and Quattro from having to comply with Parts 3 to 6 of the mandatory Wheat Code when providing port terminal services at Port Kembla.
The ACCC’s draft decisions propose to exempt both facilities from these Code provisions once Quattro’s facility, which is in the final stages of development, is completed. GrainCorp is currently not exempt from any of the code provisions.
“The ACCC’s draft view is that there will be a sufficient level of competition at Port Kembla once Quattro becomes operational, and that at that time it will be appropriate to apply the same level of regulation to those two competitors,” ACCC Commissioner Cristina Cifuentes said.
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.
The ACCC considered the way in which GrainCorp and Quattro’s facilities will compete for bulk wheat volumes, and examined the catchment areas that supply grain to Port Kembla. The ACCC also considered the level of competition in services across the supply chain.
The ACCC’s draft decisions note that there is likely to 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 facility. The draft decisions also note that GrainCorp and Quattro will compete with the container export market for wheat.
“The increase in the amount of capacity and the presence of competing bulk export service providers means that exporters are likely to be able to negotiate fair and transparent access at Port Kembla in the absence of full regulation,” Ms Cifuentes said.
The ACCC’s draft views on why it considers that GrainCorp and Quattro should be exempt from certain provisions of the code are set out in the ACCC’s draft decisions document, available at: Port Kembla wheat ports exemption assessments
The ACCC invites submissions from interested parties on its draft determinations. The closing date for submissions is Friday 14 August 2015.
Background
The Wheat 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.
If the ACCC makes final decisions to grant exemptions for GrainCorp and Quattro’s respective facilities, the port operators will not be subject to a number of the code’s provisions at these ports, 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.