Competition Bureau challenges P&H’s acquisition of grain elevator from Louis Dreyfus

From: Competition Bureau Canada

To protect competition for farmers located near Virden, Manitoba, the Competition Bureau is challenging Parrish & Heimbecker’s (P&H) recent acquisition of a primary grain elevator in that area from Louis Dreyfus Company (LDC).

On December 19, 2019, the Bureau filed an application with the Competition Tribunal for an order requiring P&H to sell either its own elevator in Moosomin, Saskatchewan or its newly acquired elevator in Virden, Manitoba.

With the acquisition, P&H now controls both grain elevators along a 180 km stretch of the TransCanada Highway. Before, the elevators in Moosomin and Virden were close competitors due to their proximity along this stretch of highway.

The two elevators closely monitored each other’s wheat and canola prices and responded to competitive activity from each other by offering farmers better prices. The acquisition eliminates this rivalry. As a result, farmers in the corridor between Moosomin and Virden will earn less for their wheat and canola.

The Bureau’s application is available on the Competition Tribunal’s website.

Quotes

“Canadian farmers deserve competition to protect their bottom line. This action seeks to protect farmers near Virden from suffering financially as a result of this transaction.”

Matthew Boswell

Commissioner of Competition

Quick facts

  • Farmers play a vital role in the Canadian economy, producing grains such as wheat, canola, barley, corn, oats and rye. In 2018, they produced approximately 31.8 million tonnes of wheat, 20.3 million tonnes of canola, 8.4 million tonnes of barley and 3.4 million tonnes of oats. This application to the Competition Tribunal aims to address market power with respect to grain handling services for Canada’s two biggest grain crops – wheat and canola.

  • Grain elevators stockpile and store grain received from farms, usually by truck. The grain is then elevated, graded, and segregated and may also be cleaned, dried and blended – collectively known as grain handling services.

  • P&H is a vertically integrated Canadian agribusiness headquartered in Winnipeg, Manitoba, owning grain elevators, grain processing assets, and export terminals in Canada.

  • LDC is a global commodities company headquartered in Rotterdam, Netherlands.

  • LDC will maintain a presence in Canada through its canola crushing plant in Yorkton, SK and its port terminal in Port Cartier, QC.

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