Tuesday, 27 June 2017 Sydney
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ACCC issues draft decision on Hunter Valley rail network access undertaking::

The Australian Competition and Consumer Commission has issued a draft decision not to accept the proposed Hunter Valley rail network access undertaking lodged by the Australian Rail Track Corporation (ARTC).

The ACCC considers that the access undertaking is not appropriate in its current form as the key terms, such as the rate of return and approach to calculating weighted average mine life, do not reflect the regulatory and commercial risks faced by ARTC.

“In making its decision the ACCC has recognised a need to balance the economically efficient operation of, use of, and investment in the Hunter Valley rail network with the legitimate business interests of ARTC and the interests of all access seekers, including passenger trains, coal and non-coal freight,” ACCC Chairman Rod Sims said.

The ACCC recognises that since acceptance of the 2011 Hunter Valley access undertaking (HVAU), there has been a change in market conditions that has influenced the ARTC’s proposed drafting, and the nature of stakeholders concerns, in relation to the 2017 HVAU. In particular, there has been a change in focus from capacity investment in the rail network to consolidation, productivity improvements, and a reduction in operating expenditure.

“In our draft decision, the ACCC has provided detailed feedback that the ARTC can use to revise the 2017 HVAU. The ACCC has also requested further information in order to determine whether the 2017 HVAU effectively implements the ARTC’s proposals,” Mr Sims said.

The ACCC acknowledges the extensive work that has been undertaken by ARTC to date in developing the 2017 HVAU. The ACCC also recognises the contribution of stakeholders throughout the development process.

The ACCC is seeking submissions in relation to this draft decision, which are due by 12 May 2017.

The draft decision is available on the ACCC website: Hunter Valley access undertaking 2017

Background

On 9 December 2016, ARTC submitted the 2017 Hunter Valley Access Undertaking to the ACCC for assessment pursuant to Part IIIA of the Competition and Consumer Act 2010. This access undertaking is for the provision of access to the Hunter Valley rail network operated by ARTC in New South Wales.

The Hunter Valley rail network is a key component of the overall coal supply chain, delivering coal from mines in the Hunter Valley to the Port of Newcastle for export. The rail network also carries passenger trains and non-coal freight trains.

ARTC originally submitted a proposed access undertaking to the ACCC in relation to the Hunter Valley network in December 2015, but withdrew that application in June 2016.

The ACCC previously accepted an access undertaking in relation to the Hunter Valley rail network on 29 June 2011.