THE National Competition Council’s recent recommendation to revoke the declaration of the shipping channel service at the Port of Newcastle has firmed the ACCC’s determination to seek greater regulation of infrastructure owners, chairman Rod Sims says.

Addressing the Australasian Transport Reform Forum today Mr Sims claimed PoN is “at risk of becoming a monopolist without constraint”.

“A monopolist that controls this type of bottleneck infrastructure [the shipping channel], operating without any regulation, has a clear incentive to maximise profits by raising prices even if this means reduced volumes or less use of their service,” he said.

“It is bad for the economy when bottleneck infrastructure, at the end of a crucial value chain, is in the hands of a company with unfettered market power.

“How is it that Australia, much more so than other countries we compare ourselves to, allows this?”

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“We are deeply concerned about what this means for users of the service, as it will cause companies to limit investment in related markets as a result. In contrast, a declaration would constrain monopoly pricing and promote investment by providing a credible threat of arbitration,” Mr Sims said.

“Just as under the Part IIIA access regime the test for vertically integrated monopolies is one of harm to upstream or downstream competition, for non-vertically integrated infrastructure we may need a “market power” test.”

“The ACCC has been considering the need for such a “Part IIIB” provision for some time. The reasonable alternative is bespoke regulation as we have for electricity networks and gas pipelines, both of which are not vertically integrated. Either can work. Why regulate energy monopolies but not transport monopolies?”

“Just as we do not want vertically integrated monopolies denying access to their competitors, we do not want non vertically integrated infrastructure exercising their market power to raise prices to users and so damage the economy,” Mr Sims said.

The Port of Newcastle has been invited to comment.

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