The Commerce Commission is closely watching the port industry and will aggressively investigate and act against anti-competitive conduct in the industry Commission Deputy Chairman Peter Allport said today.
Mr Allport was speaking at the Waterfront, Ports and Shipping Annual Conference in Wellington this afternoon about the Commerce Act and the port industry.
Mr Allport said he had three messages for the industry:
· The greatest potential for a port to engage in anti-competitive conduct is, perhaps surprisingly, not in collusion with other ports, but in unilateral action. Typically ports are dominant in markets for some of the services they provide for some cargo and they are at risk of breaching the Act if use that power to restrict competition for contestable services.
· While competition between ports is keen, the opportunity could arise for a port to enter into an agreement which substantially lessened competition between ports. This includes price fixing, collusion to exclude another rival and market sharing. To avoid any accusation of collusion, competing ports should avoid discussions with each other.
· The Act applies to port companies irrespective of whether they are owned by local authorities or private companies. The Commission and the Commerce Act have no involvement in privatisation of ports. The Act prohibits anti-competitive behaviour, and applies to all organisations in trade in New Zealand whether they are in the public sector or private sector, or are New Zealand or foreign owned.
Mr Allport said that while the Commission has already taken a precedent setting court action against a port company, Port Nelson Limited (PNL), other companies should not be complacent because the Commission will take more court action if necessary.
The PNL case resulted in the highest total penalties under the Act to date. The High Court found that PNL had breached the Act three times and imposed penalties totalling $500,000.
PNL appealed, and the Court of Appeal rejected the appeal and ordered the company to pay $25,000 costs. In an out of court settlement, PNL agreed to pay a further $325,000 to the Commission towards its costs.
The total costs and penalties were $850,000.
Mr Allport said that the companies own legal costs, the cost of its management time and the considerable bad publicity it received should all be added to the penalty.
The total is a significant deterrent to any organisation that may breach the Act.
Copies of Mr Allport's speech are available from reception at the Commission's Wellington office, 7th floor, Landcorp House, 101 Lambton Quay.
Media contact: Communications Officer Vincent Cholewa
