Shortcomings in the part of the Trade Practices Act 1974 dealing with international liner cargo shipping have again been highlighted during a Australian Competition and Consumer Commission investigation of whether to deregister a shipping agreement.
"On the basis of the available evidence and the minimalist requirements of Part X of the Act, which deals with this area, the ACCC was not in a position to press for the Agreement's deregistration", ACCC Chairman, Professor Allan Fels, said today.
"The ACCC has, in the past, been very critical of the Part X regime which allows shipping lines, under very limited scrutiny, to operate as cartels.
"In March 2000, the ACCC was directed by the Minister for Transport and Regional Services, Mr Anderson, to investigate complaints from exporters against the Australian/South East Asia Trade Facilitation Agreement.
"The Agreement allows parties to discuss and exchange information on matters of interest, such as freight rates. The exporters had complained about excessive and rapid rate rises being imposed by the shipping lines covering the route.
"The critical part of the Minister's reference required the ACCC to assess if the services of the lines were 'economic' and 'efficient'. These terms have not been defined in the legislation and their past interpretation has been a matter of considerable conjecture.
"Although the ACCC has its own definitions of the terms, in such investigations the concepts must be translated into meaningful quantitative indicators. This requires quality data and the ACCC was concerned about the quality of the data available for use in the investigation.
"The ACCC had particular difficulty in getting adequate data from Liner Shipping Services. Further in testing the LSS data against other available data the ACCC was forced to question the veracity of data related to freight capacity.
"In terms of the criteria of economical and efficient services in the Minister's reference, the ACCC does not have evidence that proves that the costs of the shipping lines belonging to the Agreement are excessive. According to information received by the ACCC, the Agreement member lines incurred losses on the northbound South East Asian trade in the nine months to March 2000.
"The ACCC notes, however, that the shipping conferences protected by Part X enjoy a special exemption that other industries can only obtain from the ACCC if it can be shown there is a net public benefit.
"This Agreement includes most of the shipping trade on the South East Asia route. After freight rates had been at an historic low in 1999 the conference agreed on a rate restoration program.
"The ACCC was concerned about the speed and size of the proposed rate restoration program. However, in reaching its final view on this issue, the ACCC gave some weight to the fact that the actual rates are presently below the minimum benchmark agreed in January 2000 and that further planned rises were not applied.
"The ACCC may have reached a different position had additional rises been implemented.
"The ACCC notes that the Parliament has recently passed some amendments to Part X which will strengthen the ACCC's role in such Agreements".