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Antitrust regulators step in on Dreyfus elevator sale

Virden elevator sale to P+H would dampen current 'rivalry'

(FITTrials.com)

The federal Competition Bureau says a ‘rivalry’ between a pair of Prairie grain elevators would be lost to farmers if one is sold to the other’s owner.

The bureau announced Friday it had filed an application Thursday with the federal Competition Tribunal, seeking an order that grain handler Parrish and Heimbecker sell either its elevator at Moosomin, Sask., or an elevator it now owns about 60 km east, near Virden, Man.

Winnipeg-based, privately-held P+H announced in September it had made a deal to buy all 10 of the primary Prairie grain elevators built by agrifood giant Louis Dreyfus Co. between 1998 and 2003.

Those 10 included Dreyfus’ facility at Virden, along with sites at Aberdeen, Kegworth, Tisdale and Wilkie, Sask., Joffre, Lyalta, and Rycroft, Alta., Dawson Creek, B.C. and Rathwell, Man.

As a result of the deal, which closed Dec. 10, “P+H now controls both grain elevators along a 180-km stretch of the Trans-Canada Highway,” the bureau said.

“Before, the elevators in Moosomin and Virden were close competitors due to their proximity along this stretch of highway,” the bureau said, as the companies “closely monitored each other’s wheat and canola prices and responded to competitive activity from each other by offering farmers better prices.”

The deal “eliminates this rivalry,” meaning “farmers in the corridor between Moosomin and Virden will earn less for their wheat and canola.”

P+H now “has the ability and incentive to unilaterally exercise market power in the relevant markets,” the bureau said in its application. It said P+H already “no longer intends” to follow through on previous plans to expand its rail car spot at Moosomin.

The bureau’s application “seeks to protect farmers near Virden from suffering financially as a result of this transaction,” bureau commissioner Matthew Boswell said in Friday’s release.

‘Limited options’

Grain growers in and around the Virden-to-Moosomin corridor would be “left with limited options,” the bureau said in its application. For those growers, the next closest elevator would be the Viterra site at Fairlight, Sask., about 35 km south of Moosomin.

But that elevator, the bureau said, “is on a secondary road and, due to highway weight restrictions, farmers may pay more to transport their wheat and canola.”

The bureau’s application to the Competition Tribunal also seeks an order blocking P+H from buying any other primary grain elevator in the two “relevant markets” for five years from the date of the order.

No other Dreyfus or P+H elevator is mentioned in the bureau’s application to the tribunal — although in all, six of the Dreyfus sites are about an hour’s drive or less from at least one P+H elevator.

Of those, the closest together are at Tisdale, where Dreyfus and P+H both have elevators.

P+H also has an elevator at Yorkton, Sask., where Dreyfus owns a major canola crushing and refining plant that will continue to accept direct deliveries from canola growers, but the crush plant is not part of the deal with P+H. — Glacier FarmMedia Network

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