Probe launched into container firms alliance

Top News | Sophie Hui 11 Jan 2019

The Competition Commission has launched a probe into the workings of several container terminal operators - including Hongkong International Terminals under Hutchison - to see if they have breached competition laws by forming an alliance.

Container terminal operators HIT, Modern Terminals Limited, COSCO-HIT Terminals (Hong Kong) Limited and Asia Container Terminal Limited - which together represent 95 percent of market share - have agreed to form the Hong Kong Seaport Alliance under which they will jointly operate and manage their 23 berths across eight terminals at Kwai Tsing in stages this year.

Incomes and expenditures will be distributed according to the negotiated proportion, but the alliance did not disclose the proportion of each alliance member.

The competition watchdog said it has opened an investigation into the matter.

"In particular, the commission is investigating whether the agreement may constitute a contravention of the First Conduct Rule of the Competition Ordinance by preventing, restricting or distorting in Hong Kong," a spokeswoman said.

"The commission is carrying out this investigation as a matter of priority."

In response, the alliance said it was confident it complied with the Competition Ordinance.

It said the form of alliance would benefit customers. "It will serve Hong Kong by enhancing the operational efficiencies, service offerings and competitiveness of the Port of Hong Kong, thereby attracting more business," it said.

"It will allow Hong Kong to better compete with other ports in the region and to continue to be a port of call for international shipping lines.

"It will also have the important benefit of reducing the environmental impact of the parties' operations in Hong Kong."

The alliance said it had told the watchdog of its plan to make the Port of Hong Kong more competitive by improving operational efficiencies.

The top three terminal companies announced the formation of the alliance on Tuesday, but the news raised concerns over whether it would become a monopoly.

Sunny Ho Lap-kee, executive director of the Hong Kong Shippers' Council, supported the watchdog's decision to investigate the alliance.

"We don't know the details of how this alliance operates and it should explain to the users and public to address their concerns," Ho said.

On Wednesday, the council issued a statement saying it was highly concerned about the negative impact on competition from the alliance. "With 95 percent market share, the industry virtually has no choice," the council's chairman Willy Lin Xuanwu said.

He added that the alliance could reach a deal on non-competition agreements over clients and pricing.

He also said currently there was a lack of monitoring and regulatory system on the competitive behaviors of alliance members.

A press conference scheduled for today organized by one of the alliance's members, COSCO Shipping Ports Limited, has been postponed due to some members being unable to attend.

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