23
Dec

ACCC Allows AdBlue Manufacturers to Collaborate on Supply

The Australian Competition and Consumer Commission (the ACCC) has granted interim authorisation in respect of the application for authorisation AA1000598 lodged on 21 December 2021 by Brenntag Australia Pty Ltd (Brenntag).

Interim authorisation is granted to enable Brenntag and other AdBlue manufacturers listed in the application1 (the Participants) to collaborate to obtain adequate supply of refined urea in an effort to ensure sufficient supply of Diesel Exhaust Fuel (also known as AdBlue) for Australian consumption and the prioritised distribution of refined urea should shortages emerge, as described at paragraph 16 of this Interim Authorisation Decision and defined as the Proposed Conduct.

Interim authorisation does not extend to any agreement on the price of AdBlue supplied to AdBlue consumers.

Interim authorisation is also granted for any other relevant party who may wish to participate in the arrangements in the future and has notified the ACCC in writing of their intention to do so (Other Participants). Interim authorisation is granted with the conditions set out in paragraphs 26 to 30.

The ACCC grants interim authorisation in relation to Division 1 of Part IV of the Competition and Consumer Act 2010 (Cth) (the Act) and sections 45(1), 46(1) and 47(1) of the Act.

Interim authorisation commences immediately and remains in place until the date the ACCC’s final determination comes into effect, the application for authorisation is withdrawn, or until interim authorisation is revoked.

Background

The information in paragraphs 8 to 10 below was provided in the application.

AdBlue is an exhaust system additive used in diesel engines to control noxious emissions and is critical to the operation of modern diesel engines.

Refined (technical grade) urea is an essential input in the manufacture of AdBlue. Australia currently manufacturers almost all AdBlue for the Australian market and imports almost all of the required refined urea. AdBlue manufacturers are currently facing difficulties securing supply of refined urea. The global shortage of refined urea is the result of export restrictions imposed by China, which prompted both aggressive buy-up by some nations and limitations on exports by others.

If the AdBlue industry is unable to engage in the Proposed Conduct, there is a real risk that shortages of AdBlue may emerge across the Australian economy. This would 1 DGL AUSBlue Pty Ltd, Mammoth Pty Ltd (EcoBlue), Spectrum Analytical Pty Ltd (Spectrum Fluid Technologies) and Green Emissions Australia Pty Ltd. have serious impacts on Australian supply chains and the economy more broadly due to the disruptions it would cause to sectors reliant upon modern diesel engines, including:

• road freight

• mining (underground mining vehicles)

• light vehicles (modern diesel vehicles made since 2016)

• agriculture (modern tractors), and

• energy (including back-up generators in South Australia).

On 9 December 2021, the Federal Government announced the establishment of an AdBlue Taskforce that will work across government and with industry to develop solutions to any potential future supply constraints. The announcement explained that options being explored include alternative international supply options for refined urea, bolstering local manufacturing capabilities and technical options at the vehicle level. The announcement also explained that at that time Australia had normal levels of stocks on hand of AdBlue, with more refined urea stocks on their way to Australia. As of 9 December 2021, Australia had over 15 million litres of AdBlue on hand (which is the equivalent of close to 5 weeks’ of business-as-usual demand) and an additional over 2 weeks’ supply from shipments on their way to Australia.

On 20 December 2021, the Federal Government announced that it reached an agreement with fertiliser manufacturer, Incitec Pivot, to secure local production of refined urea. Under this agreement, Incitec Pivot will rapidly design, trial and, on completion of successful tests, scale-up manufacturing and ‘will supply quantities as needed by current suppliers’. The Government also announced that it had accepted an offer from the Indonesian Government to provide 5,000 tonnes of refined urea in January, which is enough to make around an additional month’s worth of AdBlue.

extracted from ACCC