The agreement contains restrictions which limit the quantity of coal that New Acland can sell each year to parties other than Tarong and limit Tarong's ability to on-sell coal to third parties.

Under the agreement, Tarong has been granted an option to buy 5.7 million tonnes of coal annually from the New Acland mine in Queensland for 25 years, starting in 2011 and concluding in 2035.

Tarong will use the coal to fuel its two power stations in the Kingaroy/Nanango region of Queensland.

The ACCC understands the restrictions are intended to ensure that there will be sufficient coal available to Tarong for the life of the agreement.

Despite the restrictions, any coal produced from the New Acland mine in excess of that contracted by Tarong will be available to third parties.

"Public benefits flow from the restrictions by providing Tarong with a secure and efficient long-term supply of coal for its production of electricity," ACCC Chairman Graeme Samuel said.

"The ACCC is currently satisfied that the public benefits likely to flow from the restrictions outweigh potential anti-competitive detriment. Consequently, the ACCC is proposing to grant authorisation."