Industry allowed to collaborate on AdBlue supply arrangements as shortages loom

The ACCC has granted an urgent interim authorisation permitting manufacturers and other industry stakeholders to collaborate on arrangements for the supply of the diesel exhaust fluid, known as ‘AdBlue’ that is used in most modern diesel vehicles to control noxious emissions that are known to cause serious health problems and kill.

AdBlue manufacturers are seeking to share information and work together to develop solutions to any potential future shortages of refined urea, a key ingredient in AdBlue, as part of a coordinated government and industry response to current global pressures on the supply of urea.

“The ACCC’s interim authorisation allows AdBlue manufacturers to cooperate in a number of ways without the risk of breaching competition laws,” said ACCC Chair Rod Sims.

“This permits the industry, in conjunction with government, to co-ordinate and respond more quickly and effectively to any supply constraints of urea,” Mr Sims said.

Following the interim authorisation, the parties can collaborate on issues such as sharing information about stock levels, supply channels and manufacturing opportunities, prioritising access to refined urea and AdBlue according to need (for example, to particular geographical areas or consumers), collaborating on the production of AdBlue and implementing sales limits.

“This enables AdBlue manufacturers and the Australian Government to consider the best way to respond to any potential future supply constraints,” Mr Sims said.

“The manufacturers’ co-ordination of their response with the Government is an important step in providing a regular supply of AdBlue which is critical to our nation’s transportation sector, food production and the broader economy.”

“Importantly the coordination allowed under the interim authorisation can only occur with the oversight of the Federal Government,” Mr Sims said.

“AdBlue manufacturers are also required to invite the ACCC to any meetings where these issues are discussed.”

Authorisation has not been sought, and interim authorisation has not be granted, for AdBlue manufacturers to share information about or reach agreements on price.

“After receiving the applications for authorisation on Monday, we worked very quickly to consider and approve this application,” Mr Sims said.

Background

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. Almost all AdBlue used in Australia is currently manufactured locally. However, almost all the required refined urea is imported.

A number of sectors are reliant on modern diesel engines and therefore AdBlue, including road freight, mining, agriculture and light diesel vehicles (made since 2016).

In addition to AdBlue manufacturers the interim authorisation also allows any other parties that are notified to the ACCC to be part of the collaborative effort to develop solutions to any potential future shortages of refined urea. This may include, for example, importers of refined urea, and distributors, wholesalers or retailers of AdBlue in Australia.

On 9 December 2021, the Commonwealth Government announced the establishment of an AdBlue Taskforce that will work across government and with industry to ensure that Australia does not face any shortages. The Government noted that options being explored include alternative international supply options for refined urea, bolstering local manufacturing capabilities and technical options at the vehicle level.

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