A proposed merger between Canada’s two largest propane companies has raised a red flag on the farm.
If the merger between ICG and Superior Propane goes through, it will create a virtual monopoly, said Darrin Qualman, National Farmers Union executive secretary.
The amalgamation would give ICG and Superior 70 percent of the Canadian market.
Qualman said farmers often depend on propane to fuel grain dryers. Alternative sources of fuel are either not available to farmers, or are less efficient and more costly.
Where natural gas is available, it’s expensive to install the high-capacity pipe needed to supply grain dryers, Qualman said.
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The National Farmers Union predicts the merger would spark higher propane prices for farmers because of reduced competition.
But Superior said the proposed merger would benefit consumers. Grant Billing, the company’s chair and chief executive officer, hopes the merger will trim costs and improve service.
“We’ll be able to provide better service with better prices, we hope.”
The merger would eliminate the duplication of infrastructure now needed by the two companies to deliver propane, Billing said. The new company would also be in a better position to provide more products to its customers.
Other propane suppliers would still compete in the market, said Billing, who added that alternative sources of fuel, such as natural gas, would add to the competition.
However, he stopped short of promising lower propane prices should the merger go through.
The question of whether the merger should be allowed is now before an Industry Canada Competition Bureau tribunal. A decision from the tribunal is expected next year.
The competition bureau said it opposes the proposed merger.
Robert Lancop of the competition bureau’s merger branch believes farmers and rural communities, especially those without access to natural gas, will be among those worst affected if ICG and Superior join forces.
He predicted the merger would eventually lead to a “substantial price increase” in propane.
“We feel we have no alternative but to try and stop this merger. This is a case that we have to win.”
