CBH Group and ACCC reach WA grain transport deal


An eight-year saga in WA grain transport has come to end with new understanding

CBH Group and ACCC reach WA grain transport deal
CBH Group and the ACCC have come to a new understanding.

 

Western Australian grain growers and marketers now have more options to move their crops from farm to port after the Australian Competition and Consumer Commission (ACCC) accepted an anti-monopoly offering from Co-operative Bulk Handling Limited (CBH).

According to the ACCC, it has approved a court enforceable undertaking from CBH to allow greater opportunities for the grain producers that use CBH’s storage and handling services to select alternative transport services.

The issue stems from 2008 where CBH launched an integrated grain receival, transport and supply chain service known as Grain Express.

The new service offered a deal which involved CBH providing supply grain storage and handling services on condition that growers or marketers also acquired supply chain co-ordination services and transport services from CBH.

While initially allowing the move, the ACCC changed its mind in 2011 thinking the deal lessened grain transport services competition in WA.

CBH sought to review the decision through the Australian Competition Tribunal and in 2013 the tribunal decided to back the ACCC’s thinking.

Accepting the decision, CBH then offered Non Grain Express, an unbundled supply chain service that allowed the use of the facilities and external transport services.

However, the ACCC felt the new deal created a scenario that wouldn’t entice customers to use CBH competitor transporters.

The ACCC says the Non Grain Express service:

  • required growers to opt out of the Grain Express service within seven days of the grower delivering each parcel of grain to a CBH receival site;
  • was not available at 31 (reduced to 30 in 2015) CBH receival sites which were designated as Grain Express only sites; and
  • was priced above the Grain Express service.

Three years later, CBH has now begun to offer new services to grain producers who utilise its storage and handling facilities.

These new services are:

  • CBH Site Select - a service that will allow marketers to buy grain delivered to a CBH receival site and arrange a transport provider other than CBH to transport the grain to port or domestic customers; and
  • CBH Integrated - a fully integrated service managed by CBH from receival point to export or domestic markets

And, for the four upcoming harvest seasons, the company has also confirmed it will:

  • allow growers until 1 February after harvest to decide whether to opt out of the CBH Integrated service;
  • significantly reduce the number of CBH receival sites at which users will only be able to acquire the CBH Integrated service; and
  • price the CBH Integrated and CBH Site Select services as outlined in the undertaking and has agreed to only change its fees and charges for these services in accordance with the terms of the undertaking.

The new understanding, a culmination of extensive negotiations between the two parties, has received the tick of approval from ACCC chairman Rod Sims.

"The new services and the undertaking offered by CBH will facilitate increased competition between grain transport service providers to the benefit of grain growers and marketers and other participants in the WA grain supply chain," Sims says.

"The ACCC welcomes CBH’s offer of this undertaking to resolve this matter without the need for court proceedings."

While remaining defiant that its service didn’t have an adverse effect on competition, CBH says it has acknowledged the ACCC concerns.

"From CBH’s perspective, the services were always intended to ensure efficiencies for Western Australian growers competing in highly competitive global markets," the company says in a statement.

"Nonetheless, consistent with CBH’s focus on serving growers, it has pragmatically and constructively worked with the ACCC to resolve its concerns, while seeking the most efficient export pathways for growers."

It’s CEO Andy Crane says CBH welcomes "an outcome which is acceptable to both parties following our understanding of the ACCC’s concerns."

"As a co-operative, our focus has always been and continues to be on operating a low-cost and efficient supply chain for the benefit of Western Australian grain growers," he says.

 

 

 

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