The Australian Competition and Consumer Commission (ACCC) will push for competition in the West Australian grain logistics system, after looking into CBH’s Grain Express program, which allows the company to require growers who store grain in its up-country sites to also use CBH transport services to move the grain to port.
There was an arrangement between CBH and the ACCC in regards to Grain Express, after previous ACCC investigations allowed it on the grounds of overall supply chain benefits, however this arrangement, which allowed CBH to compel growers to use its transport, will be cancelled by the ACCC.
CBH owns around 90 per cent of up-country storage facilities in WA and also owns and operates WA's four port export terminals.
ACCC chairman, Graeme Samuel, said he considered the previous arrangement to hinder competition.
"The ACCC recognises the potential benefits in CBH offering a whole of supply chain receival, storage, handling and transport service, however, the forced tying arrangements are not necessary to realise these benefits," he said.
He said that if, as claimed, CBH’s bundled services offered the best prices, growers will continue to use them.
The example in eastern States was also cited by Mr Samuel.
"Grain is transported efficiently and cost effectively to port in other States, often as a bundled service similar to CBH's arrangement, without forcing growers to acquire all relevant storage, handling and transport services from a single supplier," he said.
Mr Samuel said the ACCC revoking the notification will, for the first time since deregulation of wheat export marketing in 2008, provide WA growers who use CBH's up-country storage facilities with choice about who they use to move their grain to port.
He said CBH was still free to offer the services.
"If the ACCC revokes the notification CBH will still be able to offer a bundled receival, storage, handling and transport service. All that will change is that growers who store their grain with CBH will be free to choose whether to use CBH's transport services or organise their own."
CBH and interested parties now can comment on the draft notice before the ACCC makes a final decision about whether to revoke the notification.