Competition regulator not opposed to GrainCorp’s acquisition of Cargill’s Gilgandra facility
The Australian Competition and Consumer Commission (ACCC) has approved Graincorp’s proposed acquisition of Cargill’s New South Wales grain storage and handling facility.
Cargill’s facility is located adjacent to GrainCorp’s bulk grain storage and handling facility in Gilgandra.
The ACCC says based on market inquires, GrainCorp’s move will not be a threat to neighbouring competitors.
Chairman Rod Sims says the ACCC conducted extensive market inquiries with many stakeholders, including grain growers, grain traders, exporters, and competing suppliers of storage and handling services in the Dubbo region, all of whom were not “generally concerned” about the proposed acquisition.
“Despite the transaction resulting in the removal of a close competitor to the existing GrainCorp site in Gilgandra, based on market feedback, the ACCC considered that there will be effective competition from other suppliers of storage and handling services in the region,” Sims says.
“On-farm grain storage is also increasing, but will not be a complete substitute for upcountry bulk storage and handling facilities.”
The ACCC also considered GrainCorp’s ability to discriminate between grain growers, for instance by charging more or offering poorer service to growers that have fewer alternatives for storage and handling.
However, based on market inquiries, the competition watchdog says the chances of discrimination seemed “unlikely”.
“In forming this view, the ACCC noted that GrainCorp publishes a schedule of fixed storage and handling fees on the east coast,” Sims says.
“In addition, GrainCorp would continue to have an incentive to deliver efficient services to growers, in order to maximise throughput in its facilities.”