Grain access deal sparks warning

Australia's competition chief has warned against lifting controls over access to the nation's crucial grain terminals, and says that unless a strong code of conduct can be struck governing their use, they should revert to full regulation.

Australia's competition chief has warned against lifting controls over access to the nation's crucial grain terminals, and says that unless a strong code of conduct can be struck governing their use, they should revert to full regulation.

Rod Sims, the chairman of the Australian Competition and Consumer Commission, says that it will be "difficult" to ensure that the mandatory code of conduct governing access to the critical bottleneck infrastructure - currently being negotiated - will be as effective as the current regime.

He said that easing controls over wheat access to the terminals - which on the east coast are owned in a near-monopoly by wheat exporter and takeover target GrainCorp - risked giving too much power to GrainCorp and its counterparts in WA and South Australia, to the potential detriment of farmers and rival wheat exporters.

"It is purely commercial behaviour for any company that has ownership of a bottleneck infrastructure to want to keep its competitors out," Mr Sims said.

"I'm all in favour of the market working, but I know what the market working means when you own a bottleneck infrastructure facility and you're competing upstream or downstream with other players. It's clear what's going to happen."

Mr Sims said he would prefer the current regime remain in place, but said the ACCC was working "very hard" to ensure the code replacing it would be as effective.

"Either we get an effective mandatory code, which assures us of effective access for competitors to the bottleneck infrastructure, but if we can't get that, if that turns out to be too hard, then yes we should happily go back to what we have now which is the current undertaking regime," he said.

Mr Sims' comments come as the government weighs up a proposed $3.4 billion takeover of GrainCorp by US agribusiness giant Archer Daniels Midland, which the ACCC has approved. The takeover, which has been backed by the GrainCorp board, has sparked fears that access to the terminals could be jeopardised in the future.

"The terminals are what we deem essential infrastructure - it is the only way we can get bulk grain in and out of the country," said Brett Hosking, grains president of the Victorian Farmers Federation. Mr Hosking said any deal governing access needed to have "teeth", and said it should be in place before the sale of GrainCorp was considered.

ADM has tried to ease concerns, telling a VFF meeting last month that it wanted "as many growers as possible using the ports".

The ACCC, along with terminal owners, grain exporters and farmers, is negotiating a mandatory code of conduct to replace an "access undertaking" regime introduced after AWB's implosion in 2008.

GrainCorp has argued that the access regime should be lifted, calling for regulation to be applied "lightly and evenly". It argues that it has a "strong incentive" to give access to its ports for wheat exports.

"It would absolutely make no commercial sense for us to restrict access to other exporters," a spokesman said.

In 2011, on the back of a Productivity Commission recommendation, the federal government unveiled plans to lift the access regime and replace it with a voluntary code of conduct. This was later boosted to a mandatory code of conduct.

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