Anti-competitive cartel arrangement alleged in court by ACCC

The Australian Competition and Consumer Commission (ACCC) has commenced proceedings in the Federal Court in Sydney against Renegade Gas which trades as Supagas and Speed-E-Gas, for an anti-competitive cartel arrangement.

The ACCC said in a statement that these companies gave effect to an anti-competitive cartel arrangement by not supplying liquid petroleum gas (LPG) cylinders for forklifts to each others' customers.

These charges may result in forklift customers of both companies, unable to obtain a competitive price from other suppliers, forcing them to pay a higher price than usual.

ACCC has alleged both the companies for contravention of the Competition and Consumer Act in the Sydney basin between 2006 and 2011.

The ACCC is seeking declarations, injunctions, pecuniary penalties and costs against Renegade Gas and Speed-E-Gas along with an implementation of a trade practices compliance program by Renegade Gas.

Last year, the ACCC raided the premises of both companies

A directions hearing will take place in the Federal Court in Sydney on September 20.

ACCC gives Viterra more time to improve wheat port capacity auction in SA

The Australian Competition and Consumer Commission (ACCC) has issued a statement saying it has agreed to port terminal operator Viterra, to vary its port terminal services access undertaking.

The variation will allow Viterra more time to work with industry to improve the proposed auction system for port terminal services in South Australia for the export of bulk wheat, the statement reads.

This will see the original timeframe of May 2012 to introduce an auction system extended to November 2012.

Viterra is required by the undertaking to introduce an auction system in South Australia, the ACCC said.

The port terminal operator applied for more time in order to develop an auction system that addresses the problems highlighted by recent auctions in Western Australia.

In the statement, ACCC chairman Rod Sims said the extended timeframe will provide Viterra and the industry with the opportunity to thoroughly consider and address complex problems that may have arisen with the proposed auction system.

"The South Australian wheat industry needs time to develop an auction system in order to avoid the inefficient outcomes experienced in WA,” he said.

"The introduction of an effective auction system will promote competition across the South Australian wheat industry to the benefit of Australian wheat farmers.”

The variations to the access undertaking provide that in the event that an auction system is not ready by August, Viterra will then accept bookings on a first-in, first served basis for shipping capacity between 1 October 2012 and 31 January 2013. 

The variation allows for an auction to be held in November for shipping capacity from 1 February 2013, unless further extended by agreement.

The ACCC’s role

The ACCC has a role in approving access undertakings for wheat exporters as part of the deregulation of the wheat industry.

Access undertakings are intended to ensure that third party exporters are able to access the port terminals operated by businesses that compete with them, ensuring fair competition in the market for the export of bulk wheat.

The ACCC accepted an access undertaking from Viterra on 28 September 2011. Part of this undertaking is an obligation to introduce an auction system as the primary means of allocating port terminal capacity by May 2012.

Viterra's varied port terminal services access undertaking and the ACCC's full reasons for the decision will be available at www.accc.gov.au/viterra.

Image: Viterra

 

Cathay caught in collusion net

As a result of its continued investigation into alleged price fixing in the air cargo industry, the Australian Competition and Consumer Commission has instituted proceedings in the Federal Court against Cathay Pacific Airways Ltd.
 
The ACCC alleges that between 2000 and 2006, Cathay Pacific Airways Ltd entered into over 70 arrangements or understandings with other international air cargo carriers that had the purpose or effect of fixing the price of a fuel surcharge, a security surcharge and rates that were applied to air cargo carried by Cathay Pacific Airways Ltd and other airlines. The ACCC alleges that the arrangements or understandings were reached in countries including Singapore, Indonesia, Hong Kong, United Arab Emirates, India, Japan and Italy.
 
The ACCC is seeking declarations, injunctive relief, pecuniary penalties, and costs. A directions hearing has been set down for 28 May 2009 at 9.30 am before Justice Jacobson in the Federal Court in Sydney.
 
Cathay Pacific Airways Ltd is the eighth airline to be the subject of ACCC proceedings for fuel surcharge price fixing.
  • On 28 October 2008, the ACCC instituted proceedings against Qantas Airways Limited and British Airways PLC resulting in penalties of $20 million and $5 million respectively, as jointly submitted by the parties.
  • On 23 October 2008, the ACCC instituted proceedings in the Federal Court against Singapore Airlines Cargo Pte Ltd.
  • On 16 February 2009 Justice Lindgren ordered pecuniary penalties against Société Air France and Koninklijke Luchtvaart Maatschappij NV of $6 million, Martinair Holland NV of $5 million and Cargolux International Airlines SA of $5 million, as jointly submitted by the parties. 
 The total pecuniary penalties to date ordered against respondent airlines in these matters is $41 million. The proceedings against Singapore Airlines Cargo Pte Ltd continue.
 
The ACCC continues to investigate other airlines with the assistance of cooperating parties, and further actions are expected over the next few months.
 

ACCC approves grain port access arrangements

The Australian Competition and Consumer Commission has formally approved CBH, GrainCorp and Ausbulk’s grain port access arrangements. Ausbulk is the wholly owned subsidiary of ABB Grain that owns and operates the ports.
 
The decision will ensure that there is fair and transparent access to grain ports operated by CBH, GrainCorp and Ausbulk, to the benefit of Australian farmers and wheat exporters.
 
The access arrangements will unlock constraints at grain ports, to the benefit of the overall Australian economy. They will promote the development of a wheat export marketing industry that is efficient, competitive and advances the needs of wheat growers.
 
The decision follows the ACCC’s draft decisions of 6 August and 23 September 2009 that it would not accept the original proposals of the three grain port operators CBH, GrainCorp and Ausbulk, and a requirement that they revise their proposed access arrangements.
 
After extensive consultation with Australian farm groups, the port operators and other grain exporters, the arrangements approved today by the ACCC include:
  • Robust prohibitions against each port operator anti-competitively discriminating in favour of its own wheat trading business or hindering access to its port terminal services, and the ability for the ACCC to order independent audits of each port operator’s compliance with the non-discrimination obligations.
  • Clear and transparent port loading protocols that the port operators are obliged to follow in managing demand for the port terminal service, for example in making decisions about the allocation of shipping slots.
  • Obligations on the port operators to negotiate in good faith with eligible wheat exporters around price and non-price offers of access to port terminal services.
  • If negotiation fails, the ability of wheat exporters to seek mediation or binding arbitration on price and non-price terms of access to the port operators’ port terminal services.
  • For those wheat exporters who wish to take a standard offer, a set of clear and certain minimum non-price terms and conditions of access to port terminal services, and an obligation on each port operator to publish its standard prices for port terminal services at least one month prior to commencement of each new wheat exporting season, and
  • obligations on each port operator to publish certain port terminal information to provide greater transparency over its operations.
The access arrangements approved by the ACCC are not prescriptive. They recognise the need to allow the grain port operators the operational flexibility to run their grain supply chains efficiently, in a rapidly evolving environment which has transitioned from a single desk to 23 accredited wheat exporters within 12 months. But they will also ensure that other wheat exporters have fair and non-discriminatory access to the grain ports to export their own wheat.
 
The arrangements do not extend to ‘up-country’ supply chains, as the Wheat Export Marketing Act makes clear that the current process is intended to provide for access to the ports only. The government has indicated that it will be monitoring the situation up-country.
 
In light of the transitional state of the industry, the grain port access arrangements have been approved for an initial period of two years. The relatively short duration of the arrangements will ensure that future regulatory arrangements can adapt to any changes in the industry environment.
 
The ACCC has formally advised Wheat Exports Australia that CBH, Graincorp and Ausbulk have had port access arrangements accepted by the ACCC. This is a pre-condition for those companies to retain accreditation from Wheat Exports Australia to export bulk wheat beyond 1 October 2009.
 
The ACCC notes the extensive work done by port operators, farm groups and the wheat industry generally in recent months to develop revised access arrangements that are appropriate, prior to 1 October.
 
Further information about the ACCC’s decision to formally approve the access arrangements, together with information about the ACCC’s review of Australian grain port access arrangements, is set out in the ACCC’s final decision to accept access undertakings from CBH, GrainCorp and Ausbulk, available on the ACCC website via the ‘For Regulated Industries’ >> ‘Wheat Export’ link.

Qantas fined $20 million

The Australian Competition and Consumer Commission (ACCC) took Qantas to court, alleging Qantas had fixed fuel surcharges on air cargo with other international airlines between 2002 and early 2006. The action has now resulted in a AUD 20 million fine, on top of an earlier  USD 300 million fine in the US for price fixing.
 
The Federal Court in Sydney has ordered Qantas Airways Limited to pay $20 million in pecuniary penalties for breaching the price fixing provisions of the Trade Practices Act 1974.
 
The Australian Competition and Consumer Commission instituted proceedings on 28 October 2008 alleging Qantas reached an understanding with other international airlines in relation to the imposition of fuel surcharges on air cargo across its global networks between 2002 and early 2006.
 
Qantas admitted to making and giving effect to the understanding, repeatedly exchanging assurances amongst airlines in the implementation of fuel surcharge increases and reaching local agreements in certain Asian countries collectively.
 
"Cartels – particularly those that are engaged in by large businesses with broad application over a period of time – have a significant effect on consumers. They are an unseen fraud on the community that must be uncovered and punished," Australian Competition and Consumer Commission Chairman, Mr Graeme Samuel said.
 
This penalty reflects the serious nature of the cartel contraventions and Qantas’ large share of the Australian segment of the market. However, they also take into account the high cooperation Qantas gave in the course of the ACCC’s investigation. Qantas made extensive admissions and joined with the ACCC in making recommendations to the court as to the penalty and other orders which might be made.
 
"Having become aware of the conduct, Qantas undertook an exhaustive investigation. It gave the ACCC relevant documents and made staff available for interview. Qantas has promised to provide ongoing assistance in the ACCC’s investigations in relation to the conduct of other airlines," Mr Samuel said.
 
Justice Lindgren also made orders restraining Qantas from engaging in similar conduct for a period of three years and to pay $200,000 contribution towards the ACCC’s costs.
 
Justice Lindgren indicated he would publish his reasons in January 2009.
 

CBH to control WA grain

Western Australia-based grain haulage company Cooperative Bulk Handling (CBH) is to submit its Grain Express proposal to the Australian Competition and Consumer Commission (ACCC).

The proposal, if successful, would enable CBH to control the state’s entire grain transport, storage and handling facilities in the wheat market without regulation.

Under the proposal, all grain would be transported via rail, and the company is seeking the ACCC’s support to implement the system before harvest season, CBH’s logistics manager Tim Collins told the ABC.

Mr Collins was quoted as saying: “Everything hinges around the bundling of freight with the storage and handling.

“That’s the critical question they’re here to consider…and we’ve got a very convincing argument about why everything with Grains Express hangs off that.”

 

 

 

 

Stevedores warned of duopoly

The Port of Melbourne.

The Port of Melbourne…warned.

The Australian Competition and Consumer Commission (ACCC) has warned a lack of competition in the stevedoring sector would get in the way of future growth.

According to the ACCC’s latest annual monitoring report of container stevedoring, throughput volumes recorded an increase of 10.7 per cent in 2007-08, with productivity levels jumping almost 47 per cent over the last decade.

ACCC chairman Graeme Samuel said the report showed decade-old waterfront reforms have significantly boosted the stevedoring sector, but a lack of competition in the industry was worrying. 

“During this time, demand for stevedoring services has doubled. The cost of using stevedoring services has fallen in real terms.

“In turn, the stevedoring businesses have become more productive and profitable, even during a period when significant expenditure on assets was made,” Mr Samuel said.

“However, as the ACCC has noted in previous reports, questions remain about the extent to which the stevedores actually compete to win each other’s business. This is important when we look forward ten years and consider the high rates of demand that are forecast to continue.”

Mr Samuel said while the ports of Sydney and Brisbane were well progressed in testing the market for new competitors, the Port of Melbourne was lagging behind with a third container terminal not set to open until 2017.

He said the delayed development at Australia’s largest port would make its two incumbents, Patrick and DP World, settle for the convenience of the current duopoly.

“Any unnecessary delays in establishing additional container terminal facilities could result in lost opportunities for greater competition.

“More intense levels of competition can not only improve efficiency but may also result in a greater share of the benefits being passed on to users and the wider community that reply on the movement of goods into and out of Australian ports,” he said.

Postage rates set to rise

The basic postage rate is set to rise from 50 cents to 55 cents as the Australian Competition and Consumer Commission (ACCC) has upheld Australia Post’s proposal.

The ACCC has issued its final decision to concede Australia Post’s proposal to lift letter prices, including large ordinary letters, and small and large PreSort Bulk Mail.

“The ACCC has decided not to object to Australia Post’s proposal because the proposed price increases do not involve Australia Post over-recovering the costs of providing these letter services,” ACCC chairman Graeme Samuel said.

“The ACCC did not identify a concern that Australia Post’s current proposal did not provide sufficient certainty for some customers. Therefore, in its decision, the ACCC has established a framework for future price notifications that will encourage Australia Post to continue to reduce costs, improve productivity, and provide more certainty for Australia Post’s customers.”

Following the decision, Australia Post needs to give written notice of the postage rate increase to the communications minister, who has the power to disapprove proposals to vary the rate within 30 days after receiving the notice.

This February, Australia Post lodged a draft notification, seeking to lift the letter rates amid the growing operational costs.

The company’s group manager letter Allan Robinson has previously said due to rising fuel, wages and other transportation costs, domestic reserved letters profitability dropped by 18 per cent last year, with a loss around $12 million expected this year.

“The number of delivery addresses for home and businesses has increased by over 800,000 since the last price rise in 2003,’ Mr Robinson said.

“The task has got bigger, the costs have increased, but growth in the letters area has only been modest.

“Even with the proposed 55 cent stamp rates…it is, and still will be, the third lowest basic postage rate in the OECD.”

Australia Post proposes to increase postal prices with effect from 15 September 2008. 

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