SYDNEY, AUSTRALIA – The Australian Competition and Consumer Commission on April 1 issued a final determination granting an exemption to Patrick Stevedoring Pty Ltd at Berth 29, Port Adelaide, Australia, opening the door for Cargill to compete with Viterra in South Australia.
Patrick, which recently entered into an agreement with Cargill to stevedore grain at the berth, expects to load 225,000 tonnes of grain per year for Cargill, which equates to 8-10 ships a year.
“The ACCC considers that Patrick faces sufficient competitive constraint to warrant reducing the level of regulation it faces under the Code when providing services at its Port Adelaide facility,” the ACCC said.
This exemption follows public consultation by the ACCC on its draft determination issued on Feb. 25 to exempt the Patrick facility. The ACCC received four submissions – from the Australian Grain Exporters Association, Glencore/Viterra, Asciano/Patrick, and Grain Producers SA. All four submissions supported granting the exemption.
“The ACCC considers that Viterra is the dominant provider of bulk wheat port terminal services in SA, especially given Viterra’s extensive upcountry network. In the absence of full regulation under the Code, Patrick will continue to face strong competition for bulk wheat volumes from Viterra’s terminals,” the ACCC said.
Consistent with its approach to exemptions at other ports, the ACCC will undertake monitoring of the bulk wheat terminals and level of competition in South Australia.
Prior to Patrick starting its operations at the port, Viterra was the only provider of bulk wheat port terminal services in South Australia, the ACCC said.
The Patrick/Cargill arrangement may increase competition in the related grain trading and grain storage markets, the ACCC said. Growers situated within proximity to relevant Cargill sites may secure more attractive prices than other growers who can only access a Viterra upcountry storage facility, the agency said.
However, Viterra will remain the dominant operator in upcountry storage and handling across South Australia. Patrick’s expected load of 225,000 tonnes only represents 3.5% of the average annual grain production from the area. Viterra will handle about 97% of the South Australian grain port throughput.
The ACCC also issued final determinations exempting GrainCorp and Quattro from having to comply with Parts 3 to 6 of the Port Terminal Access (Bulk Wheat) Code of Conduct in relation to facilities at Port Kembla.
The ACCC indicated its intention to exempt the facilities once Quattro’s facility became capable of handling bulk wheat in a final position paper released in October 2015.
“The ACCC’s assessment was that there will likely be a significant amount of spare capacity across GrainCorp and Quattro’s facilities at Port Kembla. This will mean that both parties will have strong commercial incentives to compete to attract customers to use their services,” the ACCC said.
In March, Quattro advised the ACCC that it was planning to load its first bulk wheat export vessel by the end of the month.
“The ACCC considers that it is now the appropriate time to exempt the GrainCorp and Quattro facilities given that Quattro’s facility is complete,” the ACCC said.
“The level of competition between GrainCorp and Quattro for bulk export customers at Port Kembla makes these exemptions appropriate.”
The final determinations note that the ACCC intends to monitor the level of competition at Port Kembla in the future.