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Infrastructure monopolies pushing up prices: ACCC


Australia’s consumer watchdog warns monopolies are taking over key infrastructure points and the nation risks seeing prices rise and competition drop.

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The call comes after the National Competition Council allowed the Port of Newcastle to hike its shipping fees, primarily affecting coal exports.

Australian Competition and Consumer Commission boss Rod Sims said the decision meant a key access point for exports was now at the mercy of a company trying to maximise its profits.

“With the Port of Newcastle, we already have a monopoly and it seems they are now completely unregulated. That simply does not make economic sense,” Sims told the Australasian Transport Research Forum on Monday.

“A monopolist that controls this type of bottleneck infrastructure, 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.

“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?”

Sims said monopolies on airports, roads, rail tracks, ports and other key infrastructure points would add costs and inefficiencies to the Australian economy.

He also wants proposed reforms to road funding to link licence fees and fuel taxes to road improvements.

“Part of the proposal is to introduce a form of external scrutiny over where road agencies spend their dollars,” he said.

“Any spending on projects judged not to meet national road standards will not be recoverable through heavy vehicle charges.”

Sims also said the ACCC was working on possible changes to shipping competition laws.

The liner shipping industry is allowed to coordinate and cooperate in ways that would be illegal in other industries, due to longstanding laws aimed at ensuring Australia’s shipping is competitive with the rest of the world.

“Internationally, a lot of other countries had similar broad shipping exemptions, but over the years, more and more have concluded that allowing cartel behaviour by shipping companies comes at considerable cost to the local economy,” Mr Sims said.

He said the recent Harper Review of competition law found the shipping law is outdated and unnecessary, and that it should be replaced with a narrower “class exemption” as a first step to its repeal.


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