New angle to grain rail saga

Allowing certification to lapse on February 11 will open a second front for CBH Group in its two-year dispute with Brookfield Rail over freight network access for grain trains.

It may also subtly alter the landscape for parent company Brookfield Infrastructure Partners (BIP) in relation to some of the “red-light” concerns about its $8.9 billion takeover bid for ports and rail logistics company Asciano.

Since 2011, certification as an “effective access regime” under the Competition and Consumer Act 2010 has shielded the regime and its impact on competition from the national competition watchdog, the Australian Competition and Consumer Commission (ACCC).

Allowing NCC certification to lapse will open the regime, and any disputes, up to ACCC scrutiny as an alternative to the Railway (Access) Code 2000 administered by the Economic Regulation Authority (ERA).

According to some sources, the move has the potential to create more consistency and some transparency in negotiations by allowing ACCC access to information previously claimed as commercial-in-confidence by Brookfield Rail.

Mr Nalder has confirmed that after February 11, both the code and the ACCC-approved national access undertaking with Australian Rail Track Corporation (ARTC) will apply to the WA freight rail network as management options.

As previously reported in Farm Weekly, the ERA flagged recommending to the government that the ARTC access undertaking, with common axle-loading-per-kilometre rates and incremental annual ACCC-approved price adjustments, should apply to the standard- gauge line from Kalgoorlie to Kwinana.

It already applies to lines east of Kalgoorlie.

After February 11, CBH or any other aggrieved access seeker suspecting it is not being treated fairly can apply to the NCC to have a line or lines – including closed Tier 3 lines – “declared” under part 111A of the Competition and Consumer Act.

Declaration allows the ACCC to arbitrate in disputes and it can order access be provided under terms and conditions it sets, irrespective of the State code.

According to the NCC, the aim is to “promote” efficient economic operation of, and investment in, infrastructure to encourage “effective competition” within Australia or overseas, and to provide a framework for a “consistent approach” to access regulation within an industry.

Qualifying criteria, including how important rail access for WA grain is in promoting competition, trade and for the national economy, has already been raised by CBH, WA Farmers and others with the ACCC and State government.

Responding to a Farm Weekly inquiry, Mr Nalder’s office released this statement:

“The WA Treasurer is responsible for applying for certification of the WA rail access regime.

“No request for re-certification has been submitted to the NCC.

“When the certification of the WA rail access regime expires (February 11), the national regime will become available as an additional option to infrastructure managers and access seekers.

“The WA rail access regime will also continue to remain valid.

“In agreeing to certify the WA regime in 2011, the Commonwealth minister at the time noted that any extension would be usefully informed by the ERA’s third review of the code, expected to be completed by December 2015.

“The Departments of Transport, Finance and Treasury are jointly assessing the potential impacts of decertification and options for government if required.”

Lapsed certification may have a bearing on BIP’s bid to acquire 100 per cent of Asciano if the ACCC’s concerns are not resolved by December 17, when it is due to announce a formal decision.

After February 11, Brookfield may have a case to argue that the ACCC does have a degree of control in ensuring competition is protected and therefore its flagged view in relation to the WA rail operations should change.

On Thursday last week chairman Rod Sims confirmed ACCC had “red light” concerns about the potential lessening of competition through vertical integration of Asciano’s Pacific National above-rail freight haul business with Brookfield’s WA rail network business, and with its Dalrymple Bay coal terminal in Queensland.

“The ACCC is concerned that the vertical integration will lead to a substantial lessening of competition in related markets for the supply of above-rail haulage services in WA and Queensland,” Mr Sims said.

He said State rail codes in both instances were not designed to deal with “competition issues”.

The ACCC has called for further submissions to its flagging of issues by Wednesday, November 4, with information available at www.accc.gov.au.

CBH has said it will “work further with stakeholders and provide input through this process”.

A spokeswoman for the ACCC said it could not comment at this stage on whether lapsed certification of the WA access regime might make a difference to its final view of the takeover bid.