Sims stands firm over access to Graincorp shipping terminals
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, chairman of the Australian Competition and Consumer Commission, says it will be "difficult" to ensure the mandatory code of conduct governing access to the critical bottleneck infrastructure - being negotiated at present - will be as effective as the existing 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 Western Australia 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 present regime remain in place, but said the ACCC was working "very hard" to ensure the code replacing it would be as effective. "We [should] 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 company Archer Daniels Midland, which the ACCC has approved. The takeover - backed by GrainCorp's board - has sparked fears access to the terminals could be jeopardised.
"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 group president of the Victorian Farmers Federation. He 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 federation 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 the implosion of AWB.
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.