Since April 2016, when the Australian Competition &
Consumer Commission (ACCC) published its findings in the East Coast
Gas Inquiry1 (Gas Inquiry) the media has been abuzz with
discussion about whether the existing regulatory regime for
pipelines is effective.2 The interest has been
heightened in recent days with reports of the recent meeting of the
Council of Australian Governments (COAG) on the Gas
One of the issues COAG has been considering is the ACCC's
finding that the coverage criteria in the National Gas Law (NGL)
(which determine the presence and level of regulation) need to be
amended to prevent monopoly rents being extracted. A working group
has reportedly been formed to formulate a new coverage test before
the next COAG meeting this year.3
However, what many commentators on the Gas Inquiry seem to
ignore is the impact of a recent decision by the Australian
Competition Tribunal (in Application by Glencore Coal Pty Ltd
) to impose regulation on the shipping channel and wharfage
services at the Port of Newcastle.4 This decision (which
was based on statutory criteria similar to those in the NGL) shows
that it is possible for the current regulatory regime to be applied
in a way that constrains and guards against the exercise of
The impact of the Glencore decision
In Glencore, the Australian Competition Tribunal found that
declaration of the service (which is similar to coverage under the
NGL) met all the criteria under the National Access Regime,
including (most contentiously in that case) 'criterion
(a)'.6 Under the Competition and Consumer Act 2010,
criterion (a) requires that access (or increased access) will
increase competition in an upstream or downstream
In a manner consistent with earlier court decisions,8
the Tribunal decided that it doesn't matter whether or not
access is currently being provided or whether it is being provided
on reasonable terms.
If the Tribunal's reasoning in the Glencore decision is
applied to the findings in the Gas Inquiry, it suggests that the
ACCC's concerns about the coverage criteria in the NGL may be
unwarranted. This is important because the legislative change
recommended by the ACCC in this area could result in an outcome
which is less effective at constraining exercise of monopoly power,
What does this mean for the future of pipeline regulation in
Amongst all this discussion, an important question must be
asked: if the coverage criteria aren't the problem, what
The answer appears to be information, or lack thereof. In
network industries with high fixed (and often sunk) costs, it is
notoriously difficult for access seekers (and even regulators) to
understand the infrastructure owners' 'true' cost of
supply. Yet a negotiate/arbitrate model like the one that exists
under the NGL relies heavily on an understanding of these costs.
Without such an understanding, it is very difficult for gas
shippers to know when they should challenge pricing and file a
dispute with the Regulator.
This is why the ACCC's East Coast Gas Inquiry report is so
important. It shines a light on these issues and enables shippers
to make informed decisions about whether to trigger regulatory
Maybe we don't need changes to the NGL after all. Perhaps
what we need is for shippers to see whether there are opportunities
to reduce pricing within the existing regulatory framework.
1 Australian Competition & Consumer
Commission, Inquiry into the east coast gas market, April
2 See Mark Ludlow and Angela Macdonald-Smith,
'States target gas pipeline monopolies', The Australian
Financial Review, 20-21 August 2016; Tony Wood, 'COAG lays
groundwork for national energy reform', The
4Application by Glencore Coal Pty
Ltd  ACompT 6.
5 Ibid at .
7Competition and Consumer Act 2010
(Cth) s 44H(4)(a).
8 See for example Sydney Airport
Corporation Limited v Australian Competition Tribunal 
FCAFC 146, in which the court noted that the necessary comparison
is not between the current level of access and some future level of
access post-declaration, but rather between access and no
9 Above n 1, 129-132.
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guide to the subject matter. Specialist advice should be sought
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