Hong Kong Seaport Alliance’s commitments accepted by Competition Commission

Hong Kong Seaport Alliance’s commitments accepted by Competition Commission
Kwai Tsing terminals

The Hong Kong Seaport Alliance’s (HKSPA) commitments, which include a cap on gateway cargo handling charges, have been accepted by the Competition Commission following an investigation into whether the alliance contravenes competition law.

Last year, the alliance was launched, comprising of Modern Terminals Limited (MTL), Hongkong International Terminals Limited (HIT), COSCO-HIT Terminals Limited (CHT) and Asia Container Terminals Limited (ACT), which jointly operate and manage 23 berths across eight terminals at Kwai Tsing port in Hong Kong.

The Commission had been concerned that the alliance could result in price rises or decreases in service levels in the gateway market, as well as withholding overflow services from DP World, the only terminal operator at Kwai Tsing that is not part of the alliance.

There were also worries about potential anti-competitive information flows between the alliance and its competitors at Shekou and Chiwan ports in the Mainland as a result of cross-directorships held by MTL.

Following a consultation relating to the initial proposed commitments by the HKSPA, which were published in August 2020, the regulator is satisfied that the modified proposals address its concerns.

The commitments include a cap on service charges to shipping lines regarding gateway cargo, to the level applicable to each customer on April 1, 2019.

The cap also applies to inter-terminal trucking services and does not affect the validity of any more favourable pricing arrangements agreed after April 1, 2019.

Alliance members have committed to a minimum service level for gate access to Kwai Tsing and the turnaround time for truck services at the port.

Any contractual provisions regarding operational productivity levels specific to gateway cargo can be no less favourable than any in force as of April 1, 2019.

The parties will additionally cap their charges for services related to gateway cargo to customers other than shipping lines, such as shippers and truckers, to the level applicable on April 1, 2019, or other particular levels as specified in the commitments.

The alliance members will maintain reciprocal overflow arrangements with DP World on terms that are no less favourable to it than those applicable as at April 1, 2019.

In addition, MTL will ensure that none of its representatives appointed to serve on the governing committees of the alliance are appointed as directors of the terminal operators of Shekou or Chiwan ports for up to eight years to the lifetime of the alliance.

The commitments have come into effect immediately, and last for up to eight years, with the exception of commitments on service levels and MTL’s cross-directorships, which must last for the duration of the alliance.