HARBOUR SERVICE SECTOR (Conclusion of the fact-finding investigation)
PRESS RELEASE
The Italian Competition Authority concluded its fact-finding investigation into the port industry. The survey began in November 1992 in relation to numerous complaints filed with the Authority and aimed at highlighting: a) the connection of business and regulation aspects characterizing the main harbour operators; b) the inconsistency of the economic evolution of the sector with current regulation; c) the remarkable contrast between the national legislation on the sector and the national and community competition laws.
The investigation was attentive to the whole reform of the legislation relating to Italian ports and harbours, whose enforcement is still in progress.
During the survey the Authority expressed seven advisory opinions and concluded three proceedings (see table below).
Since the early nineties, a radical reorganization of the harbour sector has been carried out, in light of many national and community interventions (the European Court of Justice judgments, the draft bill reviewing the entire legislation on the sector, the Italian Competition Authority decisions), and following the development of harbour services and, in particular, the increase up to 5 times in the inter-modal transport of container freight between 1981 and 1995. All these factors facilitated the reform of the legislation on the port industry, which has led to the issue of Law no. 84/1994.
Such a law set forth:
a) the separation between the control and the management of harbour activities;
b) the performing of harbour activities by private operators working in competition;
c) the possibility for harbour operators to provide all the services or only part of them;
d) free tariff setting;
e) the transformation of the harbour authorities into companies in competition with each other.
However, the liberalization process seems to be still hampered by institutional, legislative and cultural reasons. Opening up markets to competition is particularly critical in relation to certain activities, as the supply of harbour labour, the offer of "other services of general interest" and technical-nautical services.
The harbour labour
The harbour authorities still enjoy exclusive rights to supply fixed-term labour and labour-intensive services. Harbour companies still work as harbour firms and as suppliers of labour to competitors. The resulting restrictions on competition required the intervention by the Competition Authority (as in the case dealing with the proceedings against Brindisi harbour authority).
However, the anticompetitive effects will persist until the connection between labour supplier and harbour company is removed completely and definitely. In this context, Law no. 647/96, whose provisions do not eliminate restrictions on competition, can perpetuate the considerable contrast with the principles stated recently by the European Commission and the European Court of Justice (as the Authority pointed out on February 6th, 1997).
Technical-nautical services
The technical-nautical services (piloting, trailer, moorings and boating) are still characterized by a regulatory monopoly, even if it is not clearly and fully determined by the primary rules. Nevertheless, the incidence of costs of such services made many operators require more competition, more self-production (both for shipowners and terminal operators) and a great deal of attention to price regulation.
The survey underlines that ensuring safety does not conflict with competition. An adequate level of safety can be guaranteed by previously defining safety standards and allowing that the number of operators adjust itself to the market situation and the costs determined in such a way.
The new structure of the technical-nautical services has to go hand-in-hand with a change in the current tariff mechanisms based upon the excessive presence in the decision-making of the service suppliers and the associations of national users. In virtue of this system a) the regulator is given limited responsibility and information asymmetry is broadened to the advantage of the regulated subject; b) the attribution of responsibility for the tariff setting is dubious; c) collusion and/or discrimination to the detriment of users not represented by associations arise, as the Italian Competition Authority, the European Commission and the Court of Justice ascertained.
Services of general interest
As for this type of service is concerned, Law no. 84/94 still provides that the harbour authorities can participate in mixed-capital companies. The survey highlighted that the authorities enjoy this right widely and intend to continue to follow such a behaviour pattern. It is clear that this conduct is most likely to restrict competition and violate Law no. 287/90. As such, the Competition Authority expressed the hope that the harbour authorities would proceed rapidly to sell their shareholdings - independently of the law provision - and make use of public tenders to grant the above services.
Further, the Authority advocated the amendment of Law no. 84/94 in order to set the direct participation of the harbour authorities if and when no other company would take part to offer the services.
Self-production
The Authority mentioned the need to ensure the right of self-production in legal monopoly situations, without limits. The Authority suggested that minimum safety standards and contributions to suppliers of universal service should be imposed. Therefore, once uniform specifications are established, profitability will be the criterion by which to decide on making use of self-production. Any obstacle to the exercise of this right, on the ground of generic and unproved assumptions concerning the existence of a natural monopoly or based upon formalistic interpretations of laws, would be antieconomic and impede the functioning of a valid tool for the control of legal monopoly situations.
Conclusions
According to the Authority, the ongoing liberalization of the sector is to be carried out fully and shortly, since the delays of this process are detrimental not only to users, but also to the competitiveness of the port industry, by prejudicing its capacity of efficient interaction with the other elements of transport.
The experience of some important national harbours (in particular, Genova and Gioia Tauro) shows that the development of traffics, more competitive fares and better quality standards are achievable targets, whether the privatization and liberalization go hand-in-hand and allow the entry of new companies into the market. Achieving such goals is more effortless if the harbour authorities are aware of their new role provided by Law no. 84/94. Additionally, these experiences prove that competition does not necessarily conflict with labour safety.
The separation between regulation and business does not imply redimensioning the role of the regulator. In light of the ongoing liberalization, the regulator will need a clear understanding of its role in promoting an efficient and competitive port industry as well protecting the other public interests. To this end, the regulator would be only required to grant licenses to supply services to third parties or in self-production, following the check on objective, transparent and non discriminatory requirements (without limitations to the number of operators in any way, except for particular technical needs).
Lastly, the regulator will have to appraise if and when efficiency and safety are to be pursued by also providing the obligation or the exclusivity of the technical-nautical services.
Authority's interventions in the harbour sector
| March 27th, 1991 | Advisory opinion on harbour services |
| October 8th, 1992 | Cardile Bros./ANGOPI-Confitarma-Fedarlinea-ASA P-SNAM (Restrictive agreement) |
| September 16th, 1993 | Advisory opinion on the reform of the legislation on the harbour sector |
| August 12th, 1994 | Opinion on the decree enforcing Section 16 of Law no. 84/94 |
| June 1st, 1994 | Advisory opinion on the tariffs for harbour piloting services |
| March 14th, 1995 | Advisory opinion on the tariffs for harbour bunkering services |
| August 4th, 1995 | Nuova Italiana Coke/Provveditorato al Porto di Venezia (Abuse of dominant position) |
| June 13th, 1996 | Advisory opinion on the monopoly of the harbour authorities |
| July 11th, 1996 | BIS/Compagnia Portuale Brindisi (Abuse of dominant position) |
| February 6th, 1997 | Advisory opinion on the monopoly of the harbour companies |
| June 19th, 1997 | Compagnia portuale Brindisi (Failure to comply with the Authority's decision) |