ACCC: Wheat Port Access Code operating “reasonably well”

ACCC: Wheat Port Access Code operating “reasonably well”


Politics
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The competition watch-dog privately believes the Wheat Port Access Code is “still useful” and shouldn’t be revoked, for now.

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WITH the federal Department of Agriculture and Water Resources reviewing the Wheat Port Access Code’s operations, the competition watch-dog privately believes the federal regulations are “still useful” and shouldn’t be revoked.

The code was introduced by the Coalition government in 2014 to regulate competition and resolve conflicts between bulk grain handlers and grain marketers who share common access to strategic grain export facilities at Australian ports.

Australian Competition and Consumer Commission (ACCC) Commissioner Mick Keogh said his group dealt with several codes, relevant to the agriculture sector, which were prescribed instruments, under the Competition Act.

Mr Keogh said the Codes can be mandatory but also “entirely voluntary” and the Wheat Port Code had been in place, “basically since the deregulation of the wheat industry”.

He said the Wheat Port Code was implemented in in recognition of the fact that in three of four of the major grain producing states, the major bulk grain handlers had control over grain infrastructure - but were also competitors in terms of being grain exporters, with other supply chain participants forced to use their services.

“The aim of the Wheat Port Code was to ensure competitive neutrality so that an exporter who is not the bulk handler can have reasonable access to infrastructure and ports associated with his business, or her business, of exporting grain,” he said.

But Mr Keogh said the Wheat Port Code had been operating, “reasonably well” since its inception.

“The emergence of competition in NSW and in SA to some extent, has allowed the ACCC to reduce some of the requirements in terms of reporting and information that the major bulk handlers in those states have under the code,” he said.

“It is now the subject of a substantial review being carried out by the Department of Agriculture.

“There will be a bit of a detailed look at how well that code has been operating and whether it has been bringing about fair competition in relation access to those grain infrastructure and transport facilities.”

Mr Keogh said the Department would run the review but the ACCC’s “internal view” was that the Wheat Port Code was “still useful because we have a couple of ports in particular where there is really quite a strong monopoly that exists in terms of the operator of that port”.

“The issue remains alive about the need to make sure other exporters get a reasonable amount of access to those facilities, but that inquiry will be made by the Department and is underway at the moment,” he said.

Under the terms of the Wheat Port Code’s implementation the government was required to commence a review of its operations by September 30 this year and an issues paper was released the day before that deadline.

The ACCC doesn’t support revoking the code, at this point in time - believing it may pave the way for regional monopolies to develop and use their market powers to shut down competition.

But it believes the review can improve the Code’s operations.

Submissions to the inquiry close on November 24 with a draft report due out in February next year followed by public consultation and final report set for release in June 2018.

The issues paper asks several core questions including; about the costs of maintaining the code versus benefits; its impact on upstream and downstream competition; whether it has led to any unintended, negative consequences; and if the power to exempt cooperatives under one of the code’s subclauses should be retained.

Strange days for Horticulture Code of Conduct

Mr Keogh said another area of responsibility and oversight for the ACCC in that same domain which had produced “a fair amount of activity” was the Horticulture Code of Conduct.

“There has been a Horticulture Code of Conduct, mainly governing, or I should say attempting to govern, behaviour in fresh produce markets,” he said.

“It was a code that existed, but up until recently, didn’t have any penalties associated with it.

“It was a strange code in that it was mandatory and the ACCC could take action against breaches in the code, but the action amounted to saying ‘We have noted that you have breached the code’.

“It has now moved to a situation where the new code has provisions in it for penalties, and prosecution for breaches in the code that actually have some implications for those traders.”

Mr Keogh said the new Horticulture Code of Conduct contained some “quite unusual things and I say that somewhat sarcastically”.

“It requires documentation of agreements between traders and farmers and it requires the traders to identify whether they’re operating, as a merchant or an agent,” he said.

“It requires them to actually inform the growers of the amount of commission they are collecting and what the terms of trade are and when they will be paid and they have to do that in writing.

“Well that has caused some major upheaval if you like amongst some in the fresh produce market for what we would have thought were pretty normal, standard arrangements that apply in most markets.

“However, I think these are considered quite novel concepts in fresh produce markets.

“We are now going through some interesting processes in having that code implemented and we have basically been through quite a considerable education phase.

“And the ACCC is about to start actual audits, because of course one of the provisions of the code is that the traders have to maintain records.

“And again, I think that might be a novel concept to some that I have met in that business, so I think there is going to be some interesting times associated with the implementation of that code.”

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