CBH hails Brookfield deal delay
CBH has welcomed the competition regulator's intervention in the proposed $8.9 billion takeover of Asciano by Brookfield, saying it recognises the "grave concerns" expressed about the tie-up by WA grain growers.
The Australian Competition and Consumer Commission said last week it feared the takeover could lead to a substantial lessening of competition in rail haulage services in WA and Queensland.
The "statement of issues" looks likely to delay the tie-up, with the ACCC calling for further submissions from affected parties by November 4 and not expecting to make a final decision on the bid until as late as December 17.
CBH said the ACCC statement "recognises the grave concerns CBH and growers have regarding increased incentives the Brookfield/Asciano merger would provide for Brookfield to act anti-competitively in WA, are validly held".
"Brookfield's behaviour in operating the WA rail network has resulted in the deterioration of the asset, significant price increases and sections of track being locked up, despite operators wanting to use the rail," CBH said.
"It is important that matters such as this are properly assessed as they impact on the long-term competitiveness of key export supply chains."
The grain handling co-operative has previously urged the ACCC to block the deal, describing Brookfield as "ruthlessly driven by the extraction of infrastructure profits".
The pair are locked in a bitter dispute over a long-term access deal covering WA's rail freight network, which is controlled by the Canadian-based group under an exclusive 49-year lease.
A short-term access deal, finalised after CBH was forced to remove its $175 million fleet of locomotives and wagons from the network in May, is due to expire at the end of the year.
Brookfield said in a separate statement that it was committed to resolving the ACCC's concerns.
"In the case of the haulage of WA grain, there is no overlap in operations whatsoever," it said.
"CBH is the vertically integrated monopoly provider of rail haulage, grain storage and export port facilities to WA grain farmers and Asciano is not a participant in those sectors.
"Therefore, the proposed transaction will have no impact on CBH or its grain farmers."
Brookfield said CBH and its grain farmers were very important customers.
"We are committed to our partnership with CBH, and committed to ensuring rail remains cost effective to compete with road transport, as 45 per cent of the grain task is carried by road in WA," it said.
Brookfield and Asciano already have a strong link in WA, with the former's regional rail network doing business with Asciano's Patrick stevedoring business at Fremantle port.
Meanwhile, Kulin grower Barry West said growers in Tier 3 rail areas were "highly concerned" about Brookfield acquiring more freight assets and pushing up freight rates to unsustainable levels, as had been the case with grain on rail.
Kulin's freight rate rose by 15 per cent last year and another 5 per cent this year.
Mr West has been an active agricultural advocate for Kulin for most of his farming life, working with the Shire for more than 26 years, and serving as vice-president for 12 years and the Kulin CBH grain bin representative for more than 30.
Recently, Mr West also recently become the local member for the Grains Advisory Council.
He said Brookfield's behaviour as a monopoly provider in imposing massive price increases for grain rail access fees was resonating strongly with central Wheatbelt growers.
"The Kulin freight rates are now already $28.30 a tonne," he said.
"But if Brookfield are talking about doubling the rail access fees and if that was the case, I, and everyone in and around the Tier 3 areas, would be loading up their trucks and driving straight to Kwinana to deliver the grain.
"The ACCC needs to make sure that regulation is in place to ensure Brookfield can't act in the same way with the Asciano deal and even the Fremantle ports, as it haswith the rail access price increases and the Tier 3 rail closures."
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