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PSA complaint 'leads to antitrust probe at Mumbai port'

2018-11-20T145022Z_1011733446_RC14484119F0_RTRMADP_3_INDIA-REGULATOR-PORT.JPG
India's antitrust regulator has ordered a probe into alleged anti-competitive practices by Denmark's A. P. Moller-Maersk and Dubai's DP World at the terminals they operate at the country's largest container port in Mumbai, five sources familiar with the matter told Reuters.

New Delhi

INDIA'S antitrust regulator has ordered a probe into alleged anti-competitive practices by Denmark's A. P. Moller-Maersk and Dubai's DP World at the terminals they operate at the country's largest container port in Mumbai, five sources familiar with the matter told Reuters.

The decision by the Competition Commission of India (CCI) to investigate follows a complaint by Singapore's PSA International Pte Ltd, which alleged that Maersk and DP World created entry barriers to hinder the growth of PSA's terminal by colluding on certain charges they levy at the state-owned Jawaharlal Nehru Port Trust (JNPT).

Handling 66 million tonnes of cargo in the last fiscal year to March, JNPT handles more than half of India's traffic of shipping containers each year.

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Units of Maersk, DP World and PSA operate four of the port's five terminals, with the fifth owned by the government. The PSA terminal is planned to be the largest, expected to nearly double JNPT's capacity and help fulfil the government's vision of boosting India's economic growth.

The dispute centres on so-called inter-terminal transfers.

Under the system, which aims to make the most efficient use of common infrastructure, freight trains arriving at JNPT typically carry containers destined for several terminals, but stop at just one that handles all the cargo on a given day. Other operators then collect their containers by truck for loading at their own terminals. A similar procedure is followed, in reverse, with imported containers.

In June, PSA, owned by Singapore government-owned investment fund Temasek Holdings, lodged a complaint with the CCI, alleging it was facing discrimination because Maersk and DP World were imposing a higher fee on shipping companies for handling containers that arrived at the PSA terminal, the sources said.

In an order passed on Nov 9, the CCI said its preliminary probe found that Maersk and DP World had coordinated their efforts to prevent PSA from operating effectively at the Mumbai port, said two of the sources with direct knowledge of the case.

A. P. Moller-Maersk, the world's biggest container shipping group, said CCI was hearing a case brought forward by PSA, but declined comment as the matter was sub judice.

DP World said it had not received any formal communication from the CCI, the decision of which to order a probe and details of PSA's allegations have not been previously reported.

The CCI said, according to one source: "This co-ordinated conduct on the part of the opposite parties (Maersk and DP World units) prima facie hints at creating entry barriers for the informant (PSA)."

The regulator has asked its investigations unit to further probe the allegations and submit a report by January. The probe will also extend to the role of company executives.

In its complaint, parts of which were reviewed by Reuters, PSA alleged that Maersk and DP World had issued advisories to deter use of the PSA terminal, telling port users they would need to make their own arrangements to transfer their cargo if it was dropped at the PSA dock.

One source privy to the Indian watchdog's order said the CCI found the coordinated conduct by Maersk and DP World had the potential to bring about an anti-competitive effect; another source privy to the proceedings, though, disagreed, saying the dispute was only a commercial one and not a competition law matter, as alleged by PSA. REUTERS