FAS Russia finalized a series of cases against stevedores
Federal Antimonopoly Service of the Russian Federation (FAS) found that “Container Terminal St Petersburg” CJSC (“KTSP” CJSC) violated the Federal Law “On Protection of Competition” by fixing and maintaining monopolistically high prices for loading / unloading containers in St Petersburg seaport from 1 January 2015. FAS says the company will be issued an injunction to eliminate the violations.
FAS Commission established that a group of persons comprising “UCL Holdings” and “GlobalPorts” have collective dominance on the market of container cargo in St Petersburg. Also “KTSP” is a natural monopoly which due to the current law confirms the dominate position of the company on the market.
The tariffs for container cargo transshipment were set in US dollars and have increased significantly since 2014 in both dollar and Ruble equivalent.
The Commission Chairman, Deputy Head of FAS Alexander Red’ko pointed out: “In absolute terms the tariffs fixed independently by stevedores in St Petersburg seaport exceed the tariff level for similar services in comparable foreign ports. Therefore, actions of stevedores could have neutralized the efforts of the government to attract cargo to Russian ports and develop competitive ability of Russian transportation-and-logistics routes”.
Increasing container transshipment tariffs threatens the work of “Russian Railways” OJSC on attracting cargos and developing transit due to discounts. In fact, discounts given by “Russian Railways” OJSC were neutralized through increased prices on port services. In FAS opinion, the price disproportion could have had an adverse impact upon efficiency of the government measures for supporting Russian export, particularly, products of Russian machine-building and other products with high added value transported in containers.
The Commission also established that customers often have access to the services of cargo transshipment in St Petersburg port only when concluded contracts with particular sea lines.
Alexander Redko said: “The case analysis showed that consignors lack possibility to conclude direct contracts with stevedores for the port services. The established practice of the work of stevedores and sea lines with container cargo raises questions and will be additionally analyzed in terms of violating the antimonopoly law”.
Having studied the obtained materials, FAS paid attention to low lease rates, at which public port infrastructure is transferred for use to private companies. In FAS opinion, such policy may be contrary to the interests of the state and reduce the income to the budget from using such property. FAS intends to additionally work on the measures towards increasing the lease fee to the fair market level together with the interested executive bodies.
The antimonopoly investigation against stevedores started in June 2016 when FAS opened cases upon signs of violating the antimonopoly law against 9 companies rendering services for loading, unloading and storing cargo in seaports of the Russian Federation. The grounds for opening the cases were the survey findings of a survey of the stevedore services market, conducted upon instructions of the President and the Government of the Russian Federation.
On 10 November 2016 FAS found that “Primorie Commercial Seaport” Ltd. violated Clause 1 Part 1 Article 10 of the Federal Law “On Protection of Competition” by fixing and maintaining monopolistically high price for oil transshipment services. On 21 November 2016 FAS requested “Primorie Commercial Seaport” Ltd. to reduce prices for oil transshipment services and transfer the tariffs in Rubles.
In March 2017 FAS found that “NMTP” PJSC, “PKT” JSC, “Petrolesport” JSC and “VSK” Ltd. violated the antimonopoly law by abusing dominance: fixing and maintaining monopolistically high price. The case against “NMTP” PJSC focused on prices for the transshipment services ore for minerals, fertilizers, containers, ferrous and non-ferrous metals, oil and oil products in Novorossiysk port. Violations by “PKT” JSC and “Petrolesport” JSC concerned prices of container transshipment services in “Grand Port of St Petersburg” seaport. FAS found that “VSK” Ltd. violated the law by fixing and maintaining monopolistically high prices for container transshipment services in “Vostochny” seaport.
FAS issued injunctions to the companies to eliminate the violations and obligated them to return the unlawfully gained income to the federal budget. For instance, “NMTP” PJSC must transfer the proceeds gained through violating the antimonopoly law to the federal budget - 9.74 billion RUB, “PKT” JSC – 4.17 billion RUB, “Petrolesport” JSC and “VSK” Ltd. – 1.27 and 1.6 billion RUB accordingly.
On 30 March, FAS terminated a case upon signs of abusing dominance against “Murmansk Commercial seaport” PJSC, “Agrosphere” CJSC and “Murmansk Bulk Terminal” Ltd. On 30 May 2017, FAS also stopped the antimonopoly proceedings against “Tuapse Commercial Seaport” JSC. FAS did not find any facts regarding actions of the above companies that confirm abusing dominance.