Hong Kong launches consultation on Seaport Alliance Proposals

A consultation has been launched on proposed commitments by the Hong Kong Seaport Alliance following an investigation into whether the Alliance has harmed competition in Hong Kong.

The Hong Kong Competition Commission has commenced a consultation on proposed commitments, including the capping of charges, offered under section 60 of the Competition Ordinance by the Alliance. It said it proposes to accept the proposed commitments.

The Alliance is a contractual joint venture between Hongkong International Terminals Limited, Modern Terminals Limited, COSCO-HIT Terminals (Hong Kong) Limited, and Asia Container Terminals Limited. Pursuant to the Alliance, the Parties jointly operate and manage their 23 berths across eight terminals at Kwai Tsing port in Hong Kong, through operational, commercial and financial coordination.

The Commission has assessed whether the Alliance gives rise to anti-competitive effects on three primary markets in which the Parties provide port terminal services, namely the International Transshipment market, the Barge Transshipment market, and the Gateway market ,as well as the potential impact on other related markets.

Alliance offer

In response to the Commission’s investigation, the Parties have offered commitments cap their charges for services to shipping lines in respect of Gateway cargo, to the level applicable to each customer on 1 April 2019; provide a minimum service level for gate access to Kwai Tsing and the turnaround time for truck services at the port; and cap their charges for services related to Gateway cargo to customers other than shipping lines, to the level applicable on 1 April 2019.

They have also offered to maintain reciprocal overflow arrangements with DP World on terms that are no less favourable to it than as at 1 April 2019; and ensure that no Modern Terminals Limited representatives appointed to serve on the Governing Committees of the Alliance are appointed as directors of the terminal operators of Shekou o Chiwan ports, to allay concerns around potential anti-competitive information flows between the Alliance and its competitors at Shekou and Chiwan ports.

The proposed commitments would last for up to eight years from their effective date, however the proposed commitment for service levels would last for the duration of the Alliance.

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