CBH reaches grain handling agreement with ACCC

by Holly Demaree
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CBH Australia
Storage cells at CBH's Metro Grain Center in West Perth, Australia.
 
WEST PERTH, AUSTRALIAThe Australian Competition and Consumer Commission (ACCC) has accepted a court enforceable undertaking from Co-operative Bulk Handling Ltd. (CBH) that ensures greater opportunities for West Australian grain growers and grain marketers to use alternative grain transport services to those offered by CBH.

In 2016, CBH has begun offering new services for growers and marketers who use its storage and handling network, including:
  • “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

CBH has undertaken to the ACCC that in offering these services it will, for four harvest seasons commencing from the 2016-17 season:

  • allow growers until Feb. 1 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. 
ACCC Rods Sims Chairman
Rod Sims, ACCC chairman.

“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,” said Rod Sims, ACCC chairman.

Between 2008 and 2016, CBH offered an integrated grain receival, transport and supply chain service known as Grain Express.

In 2013, following a ruling by the Australian Competition Tribunal, CBH offered an unbundled grain supply chain service, known as Non Grain Express, to allow grain growers and marketers who used CBH’s grain storage and handling services the ability to acquire independent (non-CBH) grain transport services.

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 that were designated as Grain Express only sites; and
  • was priced above the Grain Express service.

The ACCC considers that, in combination, the effect of these requirements was that growers and marketers would not, except to a limited extent, use the Non Grain Express service and acquire grain transport services from a competitor of CBH.

The ACCC considers that CBH’s conduct had the effect, or likely effect, of substantially lessening competition in the West Australian grain transport services market, in contravention of section 47 of the Competition and Consumer Act 2010.

CBH has acknowledged the ACCC’s concerns, and while it does not agree that its conduct had an adverse effect on competition, it has offered a court enforceable undertaking to resolve those concerns and continue to manage the export supply chain efficiently for growers.

CBH CEO Andy Crane
Andy Crane, CEO of CBH.

“We welcome having reached an outcome that is acceptable to both parties following our understanding of the ACCC’s concerns,” said Andy Crane, chief executive officer of CBH. “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 Australia growers.”

The undertaking was provided following extensive negotiations between the ACCC and CBH at the conclusion of the ACCC’s investigation. The outcome completes that investigation, and facilitates the opportunity for increased competition in the market.

“The ACCC welcomes CBH’s offer of this undertaking to resolve this matter without the need for court proceedings,” Sims said.

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