ACCC puts governments in spotlight on terminal monopolies


Competition watchdog accepts AAT undertaking for Fremantle vehicle facility bid but voices wider concerns

ACCC puts governments in spotlight on terminal monopolies
Rod Sims warns politicians of dangers

 

Battle can be drawn finally on who will develop and operate Fremantle’s automotive and roro terminal after the Australian Competition and Consumer Commission (ACCC) gave the Australian Amalgamated Terminals (AAT) bid a green light to proceed.

And in its explanation of the issues, the ACCC places the anti-monopoly role of government hard into the political court.

The intervention comes as port terminal issues have come to dominate transport and logistics debate in recent times, with trucking companies and logistics operators arguing that unsustainable costs are being loaded on supply chains as State Governments seek easy revenues. 

AAT agreed to a court-enforceable undertaking and now faces Victoria Quay International RoRo Terminal (VQIRT), a Wallenius Wilhelmsen Logistics (WWL) subsidiary that gained ACCC approval on April 2 after addressing its own competition issues with such an undertaking.

AAT-related concerns have centred on its ownership structure.

The ACCC points out that AAT is equally owned by P&O Wharf Management, a full subsidiary of Qube Holdings, and Plzen, a full Asciano subsidiary.

Qube and Asciano have interests in automotive stevedoring and vehicle pre-delivery inspection (PDI) services at the Port of Fremantle.

In particular, Qube and Asciano-owned Patrick Stevedoring have automotive stevedoring operations there, while Prixcar Services, in which Qube has an indirect 25 per cent shareholding, and Patrick Autocare, in which Asciano has an 80 per cent interest, provide PDI services for motor vehicles there.

The go-ahead was given using section 87B of the Competition and Consumer Act 2010, which covers enforceable undertakings.

But ACCC chairman Rod Sims emphasises that the section has limited power and that the limitation affects other long-term lease competitors – VQIRT at Fremantle and Melbourne International RoRo & Auto Terminal (MIRRAT) for Melbourne’s Webb Dock West vehicle terminal.

"One important limitation of merger remedies in section 87B undertakings is that they do not adequately address underlying monopoly pricing concerns," Sims says

"The appropriate mechanism to deal with monopoly pricing concerns and prevent damage to the economy in the future is through undertakings under Part IIIA of the Act."

However, like section 87B, Part IIIA is also a voluntary instrument that the ACCC has no power to order the use of.

"If governments continue to privatise monopoly assets without requiring appropriate regulatory regimes, such as Part IIIA undertakings or robust State or Territory access regimes, this concern will be perpetuated and may result in inflating costs in downstream markets and ultimately higher prices for end consumers." Sims says.

You can also follow our updates by joining our LinkedIn group or liking us on Facebook