The Australian Competition and Consumer Commission has agreed to Co operative Bulk Handling Limited’s (CBH) proposed changes to its capacity allocation system, which governs how CBH allocates shipping capacity to exporters using CBH’s bulk-grain port terminals to export wheat from Western Australia.
The key changes to the system for allocating capacity to exporters include changes to the auction system and a new process that allows CBH to agree with customers to buy back capacity after it has been allocated.
“The ACCC considers that these changes improve the current auction system and acknowledges CBH’s intention to address issues experienced in previous auctions,” ACCC Commissioner Joe Dimasi said.
CBH uses the auction system to allocate port terminal capacity to the customer(s) that value it most. CBH proposed three major changes to its auction system:
- combining its two shipping periods into a single period;
- creating a rebate that is specific to each auction; and
- introducing a limit on the amount of capacity that customers may withdraw bids for in any one auction round.
The second key change will allow CBH to buy back capacity from exporters to deal with various situations such as congestion or disruptions at port.
In response to concerns expressed by industry and the preliminary views of the ACCC, CBH amended its original buyback proposal to increase transparency and clearly identify the circumstances in which it may agree to buy back allocated capacity from customers.
“CBH is required to provide information about buybacks to the ACCC and we will use that information to check that CBH doesn’t use buybacks to gain an unfair advantage over other WA wheat exporters,” Mr Dimasi said.
The ACCC’s decision will allow CBH to have the changes in place before the end of August 2013, when the port capacity auctions for the 2013/14 marketing year are due to take place.
The ACCC has a role in approving access undertakings and variations to those undertakings for port terminal operators who also have bulk wheat exporting operations. The undertakings are intended to ensure that competing exporters are able to access the ports, ensuring fair competition in the market for the export of bulk wheat.