No intervention in ports sector

Commerce and Transport Ministers, Lianne Dalziel and Paul Swain, today announced that no specific government intervention would be taken in relation to competition issues that had been raised in respect to the seaports sector.

The Ministers reached this decision based on the findings of a recent, independent review by Charles River Associates (CRA), industry feedback on the review and advice from the Ministries of Economic Development and Transport.

"The combination of advice has provided us with the basis to assess the relative merits of the options, which ranged from no intervention to the formal Commerce Commission inquiry recommended by the Shipping Industry Review," said Transport Minister Paul Swain.

Commerce Minister Lianne Dalziel said the review found New Zealand ports to be generally competitive, with limited market power, and that prices compared well internationally.

"It did identify certain instances in which customers might be ‘captured’ to a particular port, but we believe the regulatory options available to government, such as information disclosure, mandated dispute resolution, or a control inquiry by the Commerce Commission, are not warranted given the limited nature of the problem and the potential compliance costs such options would impose on the industry as a whole.

"Regulation would be a relatively blunt instrument and would be unlikely to be effective in targeting the limited and isolated market power problems present in the ports sector. A Commerce Commission inquiry would not be justified for the same reasons," said Lianne Dalziel.

Paul Swain said that the problems of captured port users were best addressed through commercial means, such as voluntary mediation and arbitration arrangements, and called on local and regional councils who own port companies to be sensitive to the impact of any disputes between port companies and port users on regional development and employment.

Officials’ advice of 5 November 2002 is available at:
www.med.govt.nz/buslt/bus_pol/portsreview/advice/index.html

Copies of the Review are available at the Ministry of Economic Development site - www.med.govt.nz - and the Ministry of Transport site – www.mot.govt.nz