Feb 17, 2019 News
The Shipping Association of Guyana (SAG) says it is moving to appeal a recent decision by a regulator slap members with a multi-million-dollar fine.
The fines pertains to what the Competition and Consumer Affairs Commission (CCAC) says were an unfair introduction of haulage fees.
CCAC announced that it has ordered the shippers to withdraw the fees, which were introduced mid-last year. Each company was fined $3.8M.
According to the SAG, it is disappointed by the recent decision made by the Commission concerning the recent implementation of container handling fees by five of its members who are also terminal operators.
“These container handling fees were implemented as a measure to recover legitimate costs of inspection and monitoring of containers and cargo, especially to ensure compliance with the international regulations required for an international port certified by the International Ships and Port Security Code (2004).”
According to the SAG, the decision handed down and circulated in the media does not accurately portray the intention of the association and its members, as it gives an impression that there was some collusion with intent to create artificially inflated prices.
“The CCAC’s ruling is not consistent with the facts and the SAG is engaging legal counsel with the intention of filing an appeal.”
CCAC said last week it has ruled unanimously against the association in a price fixing case in a complaint filed against the body by businessman Mahindranauth Jaikarran.
Jaikarran is said to be the owner of JD Transport Services.
He provides haulage service for containers from terminals operated by the members of the SAG.
Jaikarran, in his 2017 complaint to the CCAC, accused the SAG of engaging in anti-competitive behaviour by agreeing to collude to fix rates for the haulage of containers.
The intentions of SAG were to disrupt the natural market flow to its advantage, Jaikaran argued in his complaint.
The SAG members involved in the issue included Muneshwer’s Ltd, Demerara Shipping Ltd, John Fernandes Ltd, Guyana National Industrial Company Inc. and Guyana National Shipping Corporation.
The matter was heard by the Commission, chaired by Ronald Burch-Smith, Commissioners Rosalie Roberston, S.C. and Pradeepa Bholanath. Evidence was provided by both the SAG and Jaikarran.
According to the Commission, evidence presented showed that the terminal operators imposed handling fees for the private haulers, which is not charged by the SAG members, which gives them “a price advantage vis-à-vis the private hauler, to the extent of the handling fees”.
The Commission, in its findings, stated that “we are satisfied that the 15th July decision of the Shipping Association, and adopted by the five terminal operators, was an agreement within the meaning of Section 20 of the Consumer Affairs Act.
“It distorted a competitive environment among terminals for services provided by them to consumers generally, that is, to the shipping lines and agents, importers of goods and any person or entity, which had the option to exercise choice or influence where their goods were shipped.”
The commission also said that the private haulers had little choice in this matter, but by imposing the agreed rate on them in a concerted manner, the decision distorted competition and gave the shipping association an unfair and unlawfully implemented advantage.
According to the commission, price fixing is a conspiracy between business competitors to set their prices to buy or sell goods or services at a certain price point.
“This benefits all businesses or individuals that are on the same side of the market involved in the conspiracy, as the prices are either set high, stabilized, discounted or fixed,” the commission explained.
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