The National Competition Council has announced a draft decision to recommend that the designated Minister not declare the services at the Port of Newcastle.
A “declaration” under Part IIIA of the Competition and Consumer Act 2010 (Cth) would enable actual and potential users of a service to negotiate with the service provider and, if the negotiation is unsuccessful, would provide recourse to arbitration.
NSW Minerals Council
On 23 July 2020, the NSW Minerals Council made an application for a Part III declaration for services provided by the Port of Newcastle.
“Service requested by this application includes all of the services and facilities provided by [the Port of Newcastle] necessary for a vessel to enter a Port precinct and load and unload coal at relevant terminals located within the Port precinct, and then depart the Port precinct”, reads the NSW Minerals Council’s application.
This application also draws attention to the inadequacy of the price monitoring scheme under Part 6 of the Ports and Maritime Administration Act 1995 (NSW). This Part does not limit the charges that may be levied by the Port for the purpose of setting navigation service charges as defined in section 47 of the Ports and Maritime Administration Act.
The NSW Minerals Council’s application also notes that the current price monitoring scheme has not been certified as effective and no application for certification has been proposed by the New South Wales Government to make it effective. This was one of the key elements of SAL’s submission to the NCC in 2015.
The NSW Mineral Council’s application asked for a recommendation that access to the Port’s services be declared for at least twenty years because of the long-term nature of coal mines and the significant investment involved.
History of this issue (below) suggests that the Council’s final recommendation will be consistent with the draft recommendation and that the matter will be further contested at the Australian Competition Tribunal.
A complex recent history
Access, competition and pricing at the Port of Newcastle has developed a complex recent history.
Back in May 2015, commodities group Glencore made a similar application to the NCC seeking a declaration. After initial success in June 2016 in getting the channel declared as a service, the Port of Newcastle then obtained a revocation of the declaration in July 2019. That particular matter has been subject to extensive litigation (see below for more details).
In March 2020, the NSW Minerals Council lodged an application for authorisation with the Australian Competition and Consumer Commission (ACCC) seeking to provide port users with an opportunity to discuss their issues and negotiate with the port. The ACCC issued an interim authorisation and a draft determination noting the public benefits associated with that proposed negotiation.
The Port of Newcastle declined to negotiate with users and the NSW Minerals Council has since made its July application to the National Competition Council.
Other related matters
Since then, in August 2020, the Full Court of the Federal Court of Australia published its decision on the matter involving Glencore and the Australian Competition Tribunal. The Court set aside the Australian Competition Tribunal’s re-arbitration of the ACCC’s 30 October 2019 determination in respect of the access dispute between Glencore Coal Assets Australia Pty Ltd and Port of Newcastle Operations Pty Ltd.
The Court found that the Tribunal had misconstrued the terms of the declared service and erred in law by allowing the Port of Newcastle to include the cost of user funded assets in the regulatory asset base in setting its navigation service charge.
The Court has remitted this particular matter to the Tribunal for further determination according to law.