CARRINGTON, NEW SOUTH WALES, AUSTRALIA — The Australian Competition and Consumer Commission (ACCC) released on July 29 decisions on wheat code exemptions for bulk wheat terminals at the ports of Newcastle and Kembla.
The ACCC issued determinations to exempt Newcastle Agri Terminal’s (NAT) and Qube Holdings Limited’s (Qube) bulk wheat terminals at the Port of Newcastle from certain parts of the mandatory wheat code. It also 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 believes that there is sufficient competition in the market for bulk wheat terminal services at the Port of Newcastle to warrant granting exemptions to NAT and Qube,”ACCC Commissioner Cristina Cifuentes said.
The ACCC’s view is that this level of competition creates incentives for NAT and Qube to provide fair and transparent access to wheat exporters at their bulk wheat terminals. The ACCC also considers that there is competition provided from the alternative and upstream markets for wheat.
“The ACCC considers that placing NAT and Qube on a level regulatory playing field with the already exempted GrainCorp is likely to further promote competition, lead to efficiencies, and encourage investment,” Cifuentes said.
These decisions draw on the ACCC’s recent analysis of the level of competition in the Newcastle port zone.
Following these exemption determinations, the ACCC will continue to monitor all three bulk wheat port terminals at the Port of Newcastle to assess the level of competition into the future.
The ACCC intends to periodically consult with industry to seek information about exporters’ ability to access port terminal services in Newcastle following the exemptions.
At Port Kembla, the draft decision proposes 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 exemption would mean that GrainCorp would be subject to a lower level of regulation at the Port Kembla terminal (parts 1 and 2 of the code only),” GrainCorp said in a media release. “GrainCorp welcomes the ACCC’s draft decision, noting there is a consultation period in relation to it.”
“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,” Cifuentes said.
The code, which commenced on Sept. 30, 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,” Cifuentes said.
The ACCC’s draft views on GrainCorp and Quattro are set out in the ACCC’s draft decisions document that can be found here.
The ACCC’s complete assessments of NAT and Qube can be found here.