Sims slams ALC over Port of Newcastle response

By: Rob McKay


Kilgariff holds his ground as ACCC chairman says Federal Court decision strengthens logistics companies when facing monopolies

Sims slams ALC over Port of Newcastle response
Rod Sims says the court decision give companies more bargaining power when dealing with monopolies

 

Australian Competition and Consumer Commission (ACCC) chairman Rod Sims has lashed the Australian Logistics Council (ALC) for its "negative" reaction to yesterday’s Federal Court Port of Newcastle decision.

Noting the ALC had not "welcomed" the decision, Sims sees nothing in its response that reflects its positive nature.

In comments that highlight the breadth of the ALC’s membership base, which encompasses port companies, including the Port of Newcastle, as well as those that deal with them, Sims says he is "stunned" at the ALC response.

"That’s extraordinary – it’s a very negative response and I can’t understand why it would be," Sims tells ATN.

"This is designed to help.

"This is going to mean, if you’re a logistics company, you’re going to have more bargaining power when you deal with monopolies.

"Why they would react negatively I have no idea.

"If they are interested in logistics users, if they are interested in the providers – if they represent the monopoly companies, that’s fine, I understand their position.

"If they are interested in cheaper logistics this is unambiguously good news."

Sims’ comments follow those from ALC managing director Michael Kilgariff, who emphasised the complexities and potential difficulties more ACCC involvement in freight logistics might entail.

"It’s unambiguously fantastic news for transport and logistics," Sims says when asked what the Federal Court’s finding would mean.

"It means that those who want to move their goods around can be a lot less concerned by infrastructure monopolies.

"This is all about, just so we’re clear, promoting commercial negotiations.

"It’s almost impossible to negotiate with a monopoly, obviously.

"But, with this regime in place, you can go along, negotiate commercially, which of course you couldn’t before, knowing you’ve got a bit of muscle in your arm as a user.

"That if you can’t agree good terms, you can seek arbitration form the ACCC.

"Now all users of monopolies have greater bargaining power – they had no bargaining power before.

"They now have significant bargaining power and that’s good for transport and logistics and for the Australian economy."

On the question of resources, the ACCC hopes the ruling leads to greater commercial negotiation without the need to seek arbitration.

This was the experience with Sydney airport once it was declared, Sims notes.

For his part, Kilgariff sticks by his initial response.

"ALC’s position is clear and uncontroversial. If the ACCC is going to become more involved in regulating logistics infrastructure, it needs to ensure it is appropriately resourced with personnel who have experience dealing with the unique and complex issues involved in this industry," he tells ATN.

"This point was clearly emphasised in ALC’s recent submission to the Inquiry into National Freight and Supply Chain Priorities, which openly acknowledged the fact that the ACCC is likely to play an increasing role, especially around road pricing issues.

"Our submission also pointed out that the ACCC has been an active participant in recent debates on port issues, particularly noting the ACCC chairman’s October 2016 speech to the Ports Australia conference.

"ALC’s view – and the view of its members – is that regulation must be directed at improving supply chain efficiency and safety.

"We support good regulation and good regulators that fully appreciate all of the complex issues involved in the day-to day operation of key freight infrastructure.

"Given the likelihood of increasing ACCC involvement in transport and logistics, it may be prudent for the ACCC to appoint a specialist Commissioner to deal with transport and logistics issues  – similar to the role Commissioner Mick Keogh has in relation to agriculture –  and also to establish a specialist unit to identify regulatory issues, and work with the transport and logistics industry to develop regulatory solutions."

To the latter point, while accepting any huge spike in cases leading from the decision would necessitate it needing more help, Sims points out that his organisation has experience in regulating a diverse range of sectors including the likes of wheat ports, rail and Australia Post.

"I think we regulate a wide enough range of industries not to have too many concerns about knowing how to do this," he says.

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