AusRAIL, Market Sectors

ACCC warns CBH of anticompetitive grain transport system

<span class="" id="parent-fieldname-description"> The Australian Competition and Consumer Commission (ACCC) says CBH is limiting competition in Western Australia’s grain transport sector and wants to give growers choice about who they use to move their grain to port. </span> <p>By Jennifer Perry</p><p>The competition watchdog last week issued the bulk handler a draft notification that it would revoke CBH’s policy that that allows the company to require growers who store grain in its ‘up-country’ storage facilities to also use its transport services to move the grain to port for export.</p><p>“The ACCC considers that the notified conduct allows CBH to leverage its significant competitive advantage in supplying up-country receival, storage and handling services to foreclose any possibility of competition to supply transport services to customers who use its up-country storage facilities,” ACCC chairman Graeme Samuel said.</p><p>“By leveraging its dominance of up-country storage to force growers to use its transport services CBH can insulate itself from competition.”</p><p>CBH chief executive Dr Andrew Crane said the company was “obviously disappointed” with the ACC’s decision.</p><p>“… We remain of the strong view that Grain Express provides a net benefit to the community and does not significantly lessen competition in the market for grain transportation services,” Dr Crane said.</p><p>“As the ACCC is aware CBH does not make a profit from providing grain transportation services to growers.&quot</p><p>While Dr Crane welcomed the ACCC’s recognition of the potential benefits of CBH offering a whole of supply chain receival, storage, handling and transport service, the ACCC did not believe that forced “tying arrangements” was necessary to realise these benefits.</p><p>“To the extent that CBH’s storage, handling and transport service is an efficient system, delivering benefits to growers, they will continue to use it without being forced to do so,” Samuel said.</p><p>“Grain is transported efficiently and cost effectively to port in other states, often as a bundled service similar to CBH’s arrangement, without forcing growers to acquire all relevant storage, handling and transport services from a single supplier.</p><p>“In this respect, most interested parties that have objected to CBH’s arrangements have indicated that they would be likely to continue to use CBH even if they were not forced to do so, but that the opportunity to explore alternatives would put competitive pressure on the company.”</p><p>Revoking CBH’s policy will, for the first time since deregulation of wheat export marketing in 2008, provide WA growers who use CBH’s up-country storage facilities with choice about who they use to move their grain to port.</p><p>If the ACCC goes ahead with revoking CBH’s policy, the company would still be able to offer a bundled receival, storage, handling and transport service.</p><p>“All that will change is that growers who store their grain with CBH will be free to choose whether to use CBH’s transport services or organise their own,” Samuel said.</p><p>The ACCC said the timing of any revocation of CBH’s notification was important to ensure minimal disruption to the industry and is&nbsp seeking interested parties’ views about when the most appropriate time for the revocation to take effect would be (for example, between harvests).</p><p>Dr Crane said with or without the current notification, CBH had the experience, flexibility and systems to provide the most efficient whole-of-supply chain service to the grain industry of Western Australia.</p><p>“The notification has ensured this was the most efficient supply chain possible in a deregulated environment for the benefit of growers, the industry and the community,” he said.<br />.<br />&nbsp</p>