THE future of CBH's Grain Express is in doubt after the Australian Competition and Consumer Commission (ACCC) yesterday a notice revoking CBH's exclusive dealing notification.
The notification allowed CBH to require WA grain growers and marketers who use its 'up-country' storage facilities to also use its transport services to deliver grain to port for export.
CBH is the dominant provider of up-country storage facilities for bulk export grain in WA and over 90 per cent of the grain harvested in WA is stored in these facilities. CBH also owns and operates WA's four port grain export terminals.
"By virtue of the notified conduct CBH is the monopoly supplier of transport services for moving grain to port in WA," ACCC chairman Graeme Samuel said.
"The notified conduct allows CBH to leverage its substantial market power in up-country storage to insulate itself from any competition in the supply of grain transport services.
"The ACCC recognises that there are efficiencies in CBH offering a whole of supply chain receival, storage, handling and transport service.
"The ACCC's decision does not prevent CBH from continuing to offer this service and, importantly, any grower who wishes to continue to use CBH's bundled storage and transport service will remain free to 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."
The ACCC said it considered 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.
However, as is already the case with bulk storage and handling providers in other states, other suppliers will be able to compete with CBH to provide services to transport grain to port for export.
In a statement released late yesterday, CBH Group said it was disappointed in the ACCC's final decision to revoke the notification for Grain Express but would continue to champion the interests of WA grain growers to ensure they received the most value from their system.
It said it had been actively working on contingencies for some time but will now take advice from appropriate experts to consider the best course of action.
That action may involve seeking a review of the decision by the Australian Competition Tribunal.
CBH said it remained of the strong view that Grain Express provided a net benefit to the community and does not significantly lessen competition in the market for grain transportation services.
It said it would issue a more detailed response in due course.
The ACCC has decided to revoke the notification with effect from 1 May 2012. Full story in next week's Farm Weekly.