www.tca.ie/en/promoting-competition/market-studies/Ports.aspx

The Irish Competition Authority1 has a legislative power to conduct studies on competition issues2. It may conduct such studies either at its own initiative or at the request of a relevant Government Minister. On 15 June 2012, the Irish Minister for Jobs, Enterprise & Innovation requested the Authority to conduct a study on competition in the Irish ports sector. His request was part of the Government’s “Action Plan for Jobs 2012”. Ireland is heavily dependent on foreign trade both as an island but also as an open market economy with a small domestic market of circa 4 million people. When the study was published seventeen months later on 27 November 2013, the Minister commented that a “strong export performance will be crucial to the recovery in the economy and jobs market we are working so hard to achieve. That is why providing better supports and a better environment for exporters is at the centre of our Action Plan for Jobs. As part of this drive, I asked the Competition Authority to carry out a study on how competition in our ports sector can be improved, in order to make it easier and cheaper for our exporters to do business.”

The Authority’s study found that competition in port services could be improved further.

The Authority’s findings were interesting. First, it found that the characteristics of the Irish ports sector means that competition between ports is always limited but primarily for historical and geographical reasons. This meant that ensuring that competition within ports works well for each service is very important. Secondly, having focussed on load-on/load-off (“Lo-Lo”) services in Dublin Port, the Authority believed that the leasing and licencing arrangements for such operations are too long and appear to restrict competition. Thirdly, the report also expressed the view that the current licensing arrangements for stevedore services in Dublin Port appear to restrict competition. Finally, the report is somewhat tentative in nature and therefore, not surprisingly, said that more data collection and performance measures are needed for effective oversight of the sector.

The report then made six recommendations.

The first recommendation, in regard to the leasing and licensing of Dublin Port’s Lo-Lo terminals, suggested that the duration of the leases be reduced (some are over 100 years in duration) and to change the way in which licences are renewed automatically.

The second recommendation involved stevedore licensing and recommended that in Dublin Port, at least two new general stevedore licences should be issued. General stevedore licences should be granted, the study recommended, to applicants on a fair, reasonable and non-discriminatory (“FRAND”) basis, or through a tendering process. Moreover, the study recommended that: general stevedore licences should not be automatically renewable; ports should not require applicants to demonstrate that they will attract new business to the port; self-handling licences should be granted by Dublin Port Company on a FRAND basis; and where stevedore services are provided exclusively by the port directly, this should be clearly justified by the port authorities in question.

The third recommendation related to port closure and amalgamation. The study recommended that the policy focus should be on preserving competition and ensuring larger ports are operating efficiently and competing with one another. While port closures may result in lower administrative costs, the study found that such closeure are unlikely to enhance competition among ports. The Authority recommends that the Department of Transport, Tourism and Sport should be required to seek the views of the Authority on any proposed port mergers, or that ports with turnovers below the existing merger thresholds should be designated as a class of merger that must be notified to the Competition Authority regardless of whether it meets the merger thresholds. (It is not clear how practical that recommendation is in reality as most of the significant ports are already owned by the State already and it is not clear that the merger control provisions of Part 3 of the Competition Act 2002 would apply to such transaction in any event.)

The fourth recommendation related to “management models” and the recommendation was that the Department of Transport, Tourism and Sport should ensure that effective competition within ports is a key objective for port authorities.

The penultimate recommendation related to investment in port-related road and rail infrastructure. The Authority said that it is unlikely that future Government investment in port related road and rail infrastructure could be justified purely on the grounds of improving competition, and therefore any decision to invest in infrastructure in this context should be considered carefully.

The final recommendation concerned data collection and performance measures. The Study recommended that data collection and port performance measures are vital in order to analyse the level of competition within the sector and to guide future policy-making. However the study mentioned that there is a lack of both data sets. Therefore, the study recommended that the Department of Transport, Tourism and Sport should prioritise the development of performance measures and data collection for the main ports.

Interestingly, the Minister for Transport, Tourism and Sport announced that his Department will consider these recommendations in detail and within six months will reply to the Competition Authority with a ‘reasoned response’ stating in each case whether we accept or reject the individual recommendations and explaining why.

Isolde Goggin, Chairperson of the Competition Authority, said, “This is the first comprehensive study of competition in the Irish ports sector. It should therefore be of benefit to providers and users of ports services and transport policymakers generally. I believe that implementing these recommendations will help to improve competition in the ports sector which plays a hugely important role in contributing to Ireland’s competitiveness and economic growth. They will help to improve economic and consumer welfare as Ireland continues its path to economic recovery.”