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The Competition Commission of Hong Kong accepts the proposals of Hong Kong Seaport Alliance on measures to ensure fair competition
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The alliance is a joint venture between four of the five container terminal operators at Kwai Tsing port
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The alliance commits to cap cargo handling charges to shipping lines and for inter-terminal trucking services
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It also agrees to a minimum service level for gate access and the turnaround time for truck services
The Competition Commission of Hong Kong has accepted the proposed commitments from members of the Hong Kong Seaport Alliance to ensure fair competition such as by putting a cap on service charges.
The commission announced on October 30 that it has accepted the commitments made by Modern Terminals Limited (MTL), Hongkong International Terminals Limited (HIT), COSCO-HIT Terminals (Hong Kong) Limited (CHT), and Asia Container Terminals Limited (ACT).
The alliance is a joint venture between the four container terminal operators MTL, HIT, CHT and ACT to jointly operate and manage their 23 berths across eight terminals at Kwai Tsing port in Hong Kong.
The fifth port terminal operator at Kwai Tsing, DP World, is not part of the alliance, the commission said in a statement.
The acceptance came after the commitments were clarified and improved upon by the alliance to address the commission’s concerns following an investigation and a public consultation.
As part of its commitments, the alliance will put a cap on cargo handling charges for services to shipping lines at the gateway. As modified, the cap will also be applied to inter-terminal trucking services.
The alliance also agreed to a minimum service level for gate access to Kwai Tsing and the turnaround time for truck services at the port. As modified, the scope of this commitment is extended to operational productivity levels for gateway cargo.
Another commitment is to cap charges for services related to gateway cargo to customers other than shipping lines, such as shippers and truckers.
Moreover, overflow arrangements with DP World will be maintained, and no directors will be appointed to the terminal operators of Shekou or Chiwan MTL to avoid cross-directorships.
Finally, the alliance members have added an explicit reference to the plans and mechanisms they have adopted to ensure customers receive a fair share of the efficiencies anticipated by the alliance.
The commitments came into immediate effect and will last for up to eight years, except for the commitments on service levels (for gate access to their terminals in Kwai Tsing and turnaround time for external trucks) and MTL’s cross-directorships, which would last for the duration of the alliance.
Compliance with the commitments will be monitored throughout by an independent monitoring trustee on behalf of the commission.
Investigation and consultation
The commission had conducted an investigation into whether the alliance may harm competition in Hong Kong, increase prices or decrease service levels for gateway customers , or withhold overflow services from DP World.
The commission also had concerns around the 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.
In response to the commission’s investigation, the alliance members offered the proposed commitments to address the commission’s concerns. On August 12, 2020, the commission published the proposed commitments for consultation.
The commission said it considers the modified commitments as “appropriate to address its competition concerns in an effective and timely manner, and therefore has accepted them.”
Photo By ystsoi – Sam Chi Heung
