ACCC draft initially rejects Viterra's long-term proposal

by World Grain Staff
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CANBERRA, AUSTRALIA — The Australian Competition and Consumer Commission (ACCC) released a draft decision on July 16 to not accept Viterra’s proposal to introduce long term agreements.

“The ACCC’s view is that, on balance, the current proposal is not acceptable in its present form,” ACCC Commissioner Cristina Cifuentes said.

The ACCC notes that the concept of long-term agreements has broad support among exporter stakeholders. The ACCC considers that there are potential benefits in the long-term agreement proposed by Viterra, if capacity is allocated in a way that balances the interests of all stakeholders.

However, the ACCC is concerned that under the current proposal Viterra has considerable discretion in relation to the allocation of long-term capacity in the event of oversubscription. Viterra would have the ability and incentive to favor its own trading arm, Glencore, in any such allocation. The ACCC is also concerned that the proposal would appear to give a small number of large exporters an advantageous position in the allocation of long-term capacity.

The ACCC recognizes that this draft decision, if confirmed in a final decision, would mean that Viterra would need to revert to auction for at least the first part of the 2015-16 season, and that this may have little support from exporters.

“The ACCC will consider its final decision in light of the feedback it receives from stakeholders to this draft decision,” Commissioner Cifuentes said.

“The ACCC also may accept an amended proposal from Viterra that adequately addresses the concerns raised by the ACCC in the draft decision.”

The ACCC’s complete assessment of the Viterra proposal is set out at: Viterra 2015

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