The Australian Competition and Consumer Commission has decided not to grant interim authorisation* to Pacific National (NSW) Pty Limited, QR Limited and Port Waratah Coal Services Limited to immediately introduce a new queue management system at the Port of Newcastle.
The ACCC has made this decision despite receiving a late request from the applicants to delay making a decision for six weeks.
The applicants are seeking authorisation for a proposed Vessel Queue Management System to address the imbalance between the demand for coal haulage and coal loading services at the Port of Newcastle and the capacity of the Hunter Valley coal chain in 2008. They submit that the system will reduce the likelihood or extent of significant queues and the resulting costs to industry.
The applicants intend for the VQMS to replace the Medium Term Capacity Balancing System currently operating at the Port of Newcastle which is due to expire on 31 December 2007.
The VQMS represents a shift away from how port capacity allocations are determined, from being based on producer demand nominations at the port (under the current Medium Term CBS) to one based on the lesser of port nominations and rail contracts.
"Significant concerns have been raised with the ACCC that the proposed VQMS could have an immediate and permanent detrimental impact within the industry, including reduced competition in the provision of rail services in the Hunter Valley, and reduced production levels at certain mines," ACCC Chairman, Mr Graeme Samuel, said today.
"The NSW Government has also provided a submission to the ACCC which raises serious concerns as to the consistency of the proposed VQMS with common user provisions within the lease that Port Waratah Coal Services has with the government.
"The ACCC only grants interim authorisation in appropriate circumstances. This is because interim authorisation allows parties to engage in conduct before the ACCC has been able to fully assess the public benefits and detriments resulting from a proposed arrangement.
"While the ACCC has not formed a concluded view in relation to the proposed VQMS, it is clear that there are significant industry concerns over the proposal. In these circumstances, the ACCC does not consider it appropriate for it to exercise its discretion to grant interim authorisation at this stage," Mr Samuel said.
"The ACCC is conscious of the imminent expiration of the current Medium Term CBS and the consequential pressure that might be placed on ship queues in Newcastle. That said, the ACCC notes that a large queue would exist in the short term with or without the proposed scheme.
"It is disappointing that, despite attempts throughout the year for the industry to reach an agreed solution to ongoing capacity constraints in 2008 and beyond, the applicants did not seek authorisation of the proposed VQMS until 16 November 2007.
"These timing pressures have been exacerbated by incomplete provision of information.
"The ACCC may consider the issue of interim authorisation at any time. In this regard, the ACCC would be able to reconsider the applicants' request following the provision of further information in early 2008. The ACCC's decision in relation to interim authorisation should not be taken to be indicative of whether or not final authorisation will be granted by the ACCC," Mr Samuel said.
More information regarding the application and granting of interim authorisation, including the reasons for the ACCC's decision in relation to the proposed VQMS, will be available by following the Public registers link on the ACCC's website.
The ACCC is also currently considering two new applications for authorisation (from the Newcastle Port Corporation and a coal producer respectively) effectively seeking to facilitate the extension of the current Medium Term CBS.** The Newcastle Port Corporation believes that if interim authorisation was granted by the ACCC to allow for the extension of the current system, this would provide for the preservation of the status quo for a period of time to provide the ACCC and interested parties with sufficient time to consider the merits of the proposed VQMS. The ACCC has sought urgent advice from the Applicants as to whether they are likely to take advantage of these alternative proposals should authorisation be granted as a means of endeavouring to manage the vessel queue.