Tuesday, August 11, 2009

ACCC on the job

If the bulk handlers thought the Australian Competition & Consumer Commission (ACCC) had its hands full with other matters - which would allow them to set their own ambiguous rules for competitor access to their port terminals - then they were wrong. The rejection by the ACCC of their initial draft access Undertakings has left them in no doubt that the watchdog has their eye on them.

While the ACCC agreed with many of the principles expressed by the bulk handlers they were concerned by the lack of clarity and formality of them. The best example is that less then three months out from harvest and none of the bulk handlers had published indicative prices to access their services. This means that the major competitors are essentially flying blind trying to purchase grain with no idea what it may cost them to export.

Moreover, exporting arrangements and management of capacity issues (which proved a significant problem over the 2008/09 harvest) are far from the clear and the ACCC has asked the bulk handlers to go back to the drawing board to improve transparency in dealing with these issues. ACCC’s response to the CBH draft undertaking is 227 pages long – many times longer than the access Undertakings originally proposed.

On issues such as ‘ring fencing’ information the ACCC have taken a ‘wait and see’ approach, deciding not to threaten the industry with a deluge of regulation while it is in transition. But at the same time they have issued a stern warning that they would act if there was evidence that proposed ‘ring fencing’ measures were not working.

The main beef the ACCC has is with the ambiguity surrounding the publish-negotiate-arbitrate component of the proposed Undertakings. The ACCC has heard exporter concerns of the former ‘take it or leave it’ approach adopted and want a more formal and inclusive approach to setting prices for access arrangements and dealing with disputes.

Unlike Cargill Australia Pty Ltd, Elders Toepfer Grain Pty Ltd, Emerald Group Pty Ltd and Noble Resources Australia Pty Ltd which had their wheat export license accreditations extended to September 2012, the bulk handlers have some serious work to do before their export license accreditation can be considered. Wheat Export Australia (WEA) cannot issue an export license to any bulk handler unless the ACCC accepts its access undertaking. It is also likely that the bulk handlers have to apply for their licenses on an annual basis so that ACCC can monitor their compliance with their access undertakings.

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