Parrish & Heimbecker’s purchase of an elevator in Virden didn't substantially reduce competition, the Tribunal said
By Diego Flammini
Staff Writer
Farms.com
Parrish & Heimbecker’s (P&H) purchase of a grain elevator in Virden, Man., doesn’t substantially redue competition for the purchase of wheat and canola in the surrounding area.
That’s the decision the Competition Tribunal made after reviewing P&H’s acquisition of the elevator from Louis Dreyfus Company (LDC) in September 2019.
The Competition Bureau, an independent law enforcement agency tasked with protecting and promoting competition for the benefit of Canadian consumers and businesses, launched the challenge in December 2019.
The Bureau did so under section 92 of the Competition Act, which deals with mergers and whether or not the transactions are “likely to prevent or lessen, competition substantially.”
Once a challenge is filed, it’s the members of the Competition Tribunal’s job to hear the cases and decide whether to provide an order to prevent, dissolve or alter the agreement.
The Virden elevator was part of a larger deal in 2019 that saw P&H purchase 10 LDC elevators across Western Canada.
The Competition Bureau wanted the Tribunal to issue an order forcing P&H to either sell its own elevator in Moosomin, Sask. or its newly acquired location Virden.
Because if P&H kept both, it would own both grain elevators along a 180km stretch of the TransCanada Highway.
Prior to the transaction, P&H and LDC would monitor one another’s prices and offer better prices to attract farmers.
Concentrating business in the area could’ve had negative effects on farmers.
“Farms which had previously benefited from the competition between P&H and LDC were likely to pay materially more to obtain (grain handling services) from the Moosomin and Virden Elevators, and would thus receive less money for their wheat and canola,” the Bureau argued, the Tribunal said in its Oct. 31, 2022 summary.
But the Bureau failed to provide evidence suggesting this is true.
The geographic market in the surrounding area includes at least seven wheat elevators, 10 canola elevators and four crushing plants.
And grain pricing wouldn’t have changed had the Virden elevator’s ownership remained the same, the Tribunal said.
“In particular, the evidence showed that the price effects of the Acquisition were immaterial, that several effective remaining competitors remained after the Acquisition, and that post-merger market shares were below the 35% safe harbour threshold,” the Tribunal’s summary said.
The Tribunal did, however, concede that the acquisition caused “some lessening of competition for the purchase of wheat.”
The Tribunal’s reasons for its decision are confidential at this time but will be made public later.
The Competition Bureau is disappointed with the Tribunal’s ruling.
The Bureau “took this action to protect competition for farmers and customers,” it said in a Nov. 1 release, adding it is reviewing the Tribunal’s decision and determining next steps.”