Competition Bureau’s call for Manitoba elevator sale rejected

A federal antitrust tribunal’s decision may soon make Canadian grain firm Parrish and Heimbecker the uncontested owner of the full set of Louis Dreyfus’ Prairie grain elevators.

In a decision dated Oct. 31, the Competition Tribunal — the federal quasi-judicial body with the power of approval over any antitrust actions proposed by the federal Competition Bureau — dismissed an application from the bureau that would have ordered P+H to sell either the former Dreyfus elevator at Virden, Man. or the P+H elevator at Moosomin, Sask., about 60 km northwest.

“While we are disappointed that the tribunal has ruled against our challenge, we are carefully reviewing the tribunal’s decision to determine appropriate next steps,” the Competition Bureau said in a release Nov. 1.

The bureau proposed the order following Winnipeg-based P+H’s September 2019 deal to buy all 10 of the primary grain elevators Dreyfus built in the four western provinces between 1998 and 2003.

Of the 10, six of the Dreyfus sites are about an hour’s drive or less from at least one other P+H elevator, but the bureau in December 2019 said it would ask the tribunal to make an order only regarding the Virden and Moosomin sites. The bureau also sought an order preventing P+H from buying any other elevator in those markets for a set period of time.

The Moosomin and Virden elevators “were close competitors due to their proximity” along the Trans-Canada Highway, the bureau said at the time, 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,” the bureau said.

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

P+H challenged the bureau’s proposed order shortly after closing its deal with Dreyfus in December 2019. According to Competition Tribunal filings in January 2020, P+H said there was no evidence of any alleged imminent harm to farmers, other than allegations by the bureau that the company said “are based on a misunderstanding of the grain handling industry.”

The tribunal, in its Oct. 31 ruling, said the Competition Bureau’s commissioner “had not established that the acquisition lessened competition substantially in any relevant market, or was likely to do so in the future.”

Focusing on wheat and canola purchases from farmers in the Virden-Moosomin corridor, the tribunal said it found the “relevant geographic market for the purchase of wheat” was more likely than not to include “at least seven” elevators in that area. For canola, meanwhile, the area included “at least 10 elevators as well as four crushing plants.”

The tribunal said its evidence shows the price effects of the P+H deal for the Dreyfus elevators were “immaterial” and “several effective remaining competitors remained” in the market. It also found the relevant grain companies’ “post-merger” market shares to be below the 35 per cent safe harbour threshold for such cases.

The tribunal kept its specific reasons “confidential at this time.” It said it plans release a full public version of its decision at a later date, after it reaches consensus with the involved parties about what exact information would still have to be kept confidential going forward. — Glacier FarmMedia Network