CBH clings to grain monopoly

CBH Group will fight the ACCC’s decision to revoke its monopoly grip on the Western Australian grain industry

July 20, 2011

Grain handler CBH Group will fight the Australian Competition and Consumer Commission’s (ACCC) decision to revoke its exclusive dealing notification.

ACCC revoked CBH Group’s monopoly Grain Express system in Western Australia, which forces grain growers using the group’s storage facilities to also use its transport services.

CBH Group Chairman Neil Wandel says he remains of the strong view that Grain Express in its current form has provided the growers, the grain industry and the community "with the most efficient grain logistics system possible without substantially lessening competition in the market for grain transportation services".

"We have the evidence to provide this and we also consider our prospects of success at an appeal make it worth pursuing," Wandel says.

"As we have said repeatedly, our determination to try to retain Grain Express for growers is not because we are trying to protect an inefficient system or to avoid competition.

"It is because we genuinely believe the current bundled system delivers more efficiently and benefits the growers and the industry then having multiple marketers coordinating grain transport from our upcountry receival sites to port. These benefits include enabling all grain marketers to offer prices to growers at any delivery site in the CBH network."

The ACCC will continue to offer competitive grain storage, handling and transport system with or without ACCC’s authorisation, he adds.

"However, the uncertainty created by potential leakage to competitor transport systems and increased operating costs associated with gearing up for multiple user access to our sites will lessen overall efficiencies and value delivery to growers."
It has lodged its appeal against the ACCC’s decision with the Australian Competition Tribunal.

ACCC Chairman Graeme Samuel says the ACCC’s decision does not prevent CBH from offering services and any grower who wishes to use CBH’s storage and transport service can 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.

Some growers claimed that in the time of high congestion in the CBH supply chain, they were required to continue to use its transport services when other alternatives allowing them to bypass the congestion were available.

"In this respect, forced acquisition of transport services from CBH not only prevents growers and marketers from exploring other transport options that may better suit their individual needs, it also insulates CBH from any competitive pressure in relation to the terms and conditions on which it supplies transport services," Samuel says.

"The ACCC considers that it is likely that CBH will continue to be the dominant provider of grain receival, storage and handling services and port terminal services for grain and at least a major provider of transport services."

The ACCC notification will take effect from May 1, 2012.

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