Tuesday, January 19, 2016

Container Terminals Freight Deal With Port Authority Under European Commission Investigation

Retrospective Reduction of Tonnage Throughput Avoided Compensation Payments
Shipping News Feature
BELGIUM – The European Commission (EC) has opened an in-depth inquiry into whether reductions in compensation payments granted by the Port of Antwerp to two container terminal operators gave them an undue advantage over competitors, in breach of EU state aid rules. It has been alleged that the port authority retroactively revised the minimum freight tonnage requirements in favour of the two terminal operators in question, PSA Antwerp and Antwerp Gateway, instead of collecting full compensation as normally required.

The Port of Antwerp is managed by the Antwerp Port Authority, a public authority, and fully-owned by the city of Antwerp. The Authority makes land available to companies to operate in the port area on the basis of concession agreements.

The concession agreements for the two container terminal operators contained a requirement that a minimum amount of containers must be handled in the port every year (minimum tonnage requirements). Between 2009 and 2012 PSA Antwerp and Antwerp Gateway did not reach these minimum tonnage requirements. Under the agreements, the two were obliged to pay compensation to the Authority, however, instead of collecting the compensation due from the two companies, in March 2013 the Antwerp Port Authority retroactively revised the minimum tonnage requirements downwards. This significantly reduced the amount of compensation to be paid by PSA Antwerp and Antwerp Gateway, dropping it by around 80%.

Following a complaint from a competitor, the Commission has opened an in-depth investigation to examine whether a private investor would have accepted reducing its compensation in a similar manner. If the operation was not carried out under normal market terms it could constitute state aid as defined by EU rules. The Commission would then need to verify whether such aid could be authorised under state aid rules that allow Member States to grant state aid for certain specific public interest goals.

The opening of an in-depth investigation gives interested third parties the opportunity to submit comments on the measures under assessment. It does not prejudge the outcome of the investigation.

In 2004, the Antwerp Port Authority concluded concession contracts with PSA Antwerp NV and Antwerp Gateway NV for the provision of services related to the transhipment of containers in the Deurganck dock of the Port of Antwerp. The concession contracts were concluded for a period of 42 years.

Under EU state aid rules, public interventions in favour of companies can be considered free of state aid when they are made on terms that a private operator would have accepted under market conditions (the market economy investor principle - MEIP). If this principle is not respected, the public interventions involve state aid within the meaning of Article 107 of the Treaty on the Functioning of the European Union, because they confer an economic advantage on the beneficiary that its competitors do not have.

Photo: The Deurganck dock lock, adjacent to the Antwerp Gateway terminal, the world's new largest lock on the left bank of the Scheldt due to open this year to provide the left bank docks access to the sea between the Scheldt and the Waasland Canal.