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(Adds remarks on legislation, quotes)
By Randall Palmer
March 12 (Reuters) - Canadian Pacific Railway Ltd and Canadian National Railway Co have such huge market power that they cannot be allowed to dictate how Canada's grain shipment backlog is cleared, Prime Minister Stephen Harper said on Thursday.
Harper said in an appearance in Saskatchewan that the grain backlog was not nearly as bad as it was a year ago in the wake of the record 2013 harvest, but he said the government was still concerned.
He said that for the most part, the two main railways had complied with compulsory minimum shipments of grain that the government had required.
"We are tracking this very closely. The system is clearly not under anywhere near the strain it was a year ago, but nevertheless we remain concerned. ... This is a major, major export for this country," he said.
Justifying the government's action, Harper said he recognized Canada's is a market economy, and the grain and railway businesses are market-based.
"But we understand, and it's important that everyone who's looking at this system understands, that this is an unusual situation where in the marketplace you have two large suppliers - the two big railway companies - where they have extraordinary market power," he said.
"And we simply cannot accept outcomes where those two big companies would dictate to the market just what they think is satisfactory in their interests. That is not going to serve the wider interests of grain farmers or of the Canadian economy."
The Conservative government is committed to making sure there is legislation and rules that allow the grain transportation system and the transportation system more generally to function in the best interests of everyone, Harper said.
Additional reporting by David Ljunggren; Editing by Richard Chang