As a result the ACCC is seeking submissions on the development of water charge rules for termination fees.

"The termination fees proposed in the position paper will allow water markets to operate more efficiently by removing distortions to trade and by sending signals

to water users about efficient investment in water infrastructure assets," ACCC chairman Graeme Samuel said.

"At the moment some irrigation infrastructure operators impose high termination fees on farmers who elect to sell their water and terminate water delivery rights.

"High termination fees prevent farmers from realising the market value of their water entitlements and deter trade in water."

The ACCC's position paper proposes a cap on termination fees of 11-times annual access fees, falling to eight-times annual access fees by 2015.

In adopting these multiples the ACCC has attempted to balance the legitimate interests of irrigation infrastructure operators and farmers.

"Farmers will benefit through lower termination fees and higher net returns from selling water rights," Mr Samuel said.

"At the same time the proposed multiples will give irrigation operators at least 10 years to assess the impact of trading on their networks and rationalise the network if necessary."

* The position paper is part of an ongoing consultation process. Submissions are to be provided to the ACCC by 5pm Monday 15 September 2008.