CBH threatens further action against ACCC after the competition watchdog announced the company would lose its monopoly powers
By Rob McKay | June 30, 2011
Co-operative Bulk Handling (CBH) Group will lose its monopoly powers in Western Australian grain logistics next May, the Australian Competition and Consumer Commission says.
The ACCC’s decision came a day after CBH says it has awarded rolling-stock manufacturer an $80 million contract for 570 new aluminium rail wagons, with delivery starting in February.
Through its Grain Express system, the grain-grower cooperative is the dominant provider of up-country storage facilities for bulk export grain in Western Australia and more than 90 percent of the grain harvested in the state is stored in its facilities.
In explaining the move, ACCC Chairman Graeme Samuel mentions a lack of flexibility during periods of high congestion in the CBH supply chain mean alternatives have not been available for growers and marketers who seek them.
Samuel also mentions grain industry frustration at the level of service from CBH.
“By virtue of the notified conduct CBH is the monopoly supplier of transport services for moving grain to port in WA,” ACCC Chairman Graeme Samuel says.
“The notified conduct allows CBH to leverage its substantial market power in up-country storage to insulate itself from any competition in the supply of grain transport services.
Samuel says the decision does not stop CBH from offering a whole of supply chain service and that growers can still use the company’s bundled storage and transport service if they wish to do so.
“However, growers and marketers who consider that their transport requirements may be more efficiently met through alternative options to CBH will be free to explore such options,” he says.
The cooperative has expressed its disappointment in the ruling and flagged the possibility of an appeal.
“CBH has been actively working on contingencies for some time but will now take advice from appropriate experts to consider the best course of action,” the company says.
“That action may involve seeking a review of the decision by the Australian Competition Tribunal.
“CBH remains 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.”