ACCC gives Patrick and ACFS the green light

Joint venture can go ahead as Victorian wheat terminals get code exemptions

ACCC gives Patrick and ACFS the green light
ACFS's Patrick joint venture can advance unimpeded by the ACCC.


Port issues continue to focus minds at the Australian Competition and Consumer Commission (ACCC), with the agency allowing a port trucking joint venture and exempting certain Victorian terminals from aspects of the mandatory wheat code.

Asciano’s Patrick Container Ports and Australian Container Freight Service (ACFS) have gained the green light for their link, with ACCC Commissioner Dr Jill Walker saying it considers that "substantial lessening of competition" was unlikely "in any market" as a result.

The ACCC notes that:

  • Patrick and ACFS both supply wharf cartage as well as warehousing and distribution services in Sydney, Melbourne, and Brisbane
  • Both parties have interests in empty container parks in Sydney
  • ACFS is expected to commence operations in Fremantle and compete with Patrick in that market in the future.

But it inisits Patrick Terminals was already vertically integrated before the joint venture and the joint venture was unlikely to substantially alter its incentives.

"The joint venture would be one of the largest providers of each service in Sydney, Melbourne, Brisbane and Fremantle," the ACCC says.

"However, the ACCC determined that, following the joint venture, Patrick and ACFS would continue to face strong competition from a number of alternative providers (including Qube, Toll Extra, Swift, Chalmers and others)."

Meanwhile, Emerald’s Melbourne Port Terminal (MPT) and GrainCorp’s Geelong terminal are in the clear.

"The ACCC’s view is that there is sufficient competition between Emerald’s MPT and GrainCorp’s Geelong port terminal to support granting exemptions at this time," ACCC chairman Rod Sims says.

Emerald’s MPT and GrainCorp’s Geelong port terminal compete for grain from similar catchment areas in Victoria and southern New South Wales, the ACCC points out.

Both facilities face significant competitive pressure from container wheat exports from the Port of Melbourne, which represent about 30 per cent of wheat grown in Victoria.

The ACCC also found that there was a degree of spare bulk export capacity at the Melbourne and Geelong terminals.

"The ACCC has therefore made determinations that the full application of the Code is no longer required at Emerald’s MPT and GrainCorp’s Geelong terminal," Sims says.

However, the ACCC’s analysis indicates that GrainCorp’s Portland terminal faces less competitive constraint as there do not appear to be sufficient alternative export options for marketers, particularly from western Victoria.

While some marketers may export through a port other than Portland, evidence suggests that the transport costs to do so are likely to be substantial for a number of marketers, it adds.

"Granting an exemption for GrainCorp’s Portland terminal at this time would not be appropriate as the ACCC’s findings indicate that there are limited competitive pressures to constrain GrainCorp’s market power at the port," Sims says.

Following these exemption determinations, the ACCC will monitor the Victorian wheat port terminals to continue to assess the level of competition for these facilities into the future.

It pledges to monitor shipping activity and the market concentration of exporters shipping grain from Emerald’s MPT and GrainCorp’s Geelong terminal.

"The ACCC would be concerned if there was evidence that Emerald or GrainCorp were taking a much larger or growing proportion of export capacity at their respective ports at the expense of other exporters, which could limit the competition for grain grown by Australian farmers," Sims says.

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