Maersk is abusing its dominant position at JN Port: Indian Competition Review

Danish conglomerate AP Moller Maersk Group, with interests across the logistics supply chain, such as ports, container freight stations (CFS) and shipping, is using its “dominant position” at the JN Port to dictate prices by limiting competition in the CFS market, alleges Indian Competition Review, a policy advisory society, in a recent complaint to the Competition Commission of India (CCI).

The group does so by bundling services with some CFSs — either operated by the group or those with which it has tie-ups, forcing shipping lines to use these CFSs even if they are priced higher, alleges ICR. Such a move by APM Terminal limits competition in the CFS market, which is not regulated by the port tariff regulator, it says.

It violates certain portions of Section 4 by abusing its dominant position, alleges Indian Competition Review.

APM Terminals has a majority stake in Gateway Terminals India Pvt Ltd (GTIPL) terminal at JN Port. GTIPL handles 45 per cent of containers handled at JN Port. JN Port handles the over 50 per cent of container traffic among major ports in India.

The fourth container terminal at JN Port — to be operated by Singapore's PSA — is expected to be up and running by end-2017. “Vessels wanting a berth at GTIPL are being coerced by APM Terminal Mumbai, which operates GTIPL, to obtain its CFS services or services by its select partners operating at JN Port. Vessels wanting to berth at GTIPL in future .....are also coerced by APM Terminal Mumbai to obtain CFS service by one of the two Maersk CFS or two more, with which the firm has tie ups,” the policy advisory firm has claimed. There are 31 listed CFS on JNPT website.

Container terminal services and services offered by CFS are distinct and cannot be clubbed together to form a single product.

End user of services at a port – receipt and dispatch of cargo, stuffing and CFS — is an importer who imports goods, who has no say in selection of the terminal or the CFS.

Since shipping lines are coerced into selecting either Maersk or particular CFS, there is an adverse impact on competition between rest of the players offering CFS services, even when their services are competitively priced.

ICR has further claimed that GTIPL has forced shipping lines into having high levels of minimum guarantee, failing which the shipping lines will have to pay heavy penalty.

“The move comes at a time when majority of CFSs at JN Port are trying for even minimum work to sustain in this market,” Indian Competition Review has stated.

It also uses diverts shipping lines to a private port operated by the group at Pipavav, APM Terminals Pipavav, where the tariffs are not regulated, ICR has alleged.

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