The Australian Competition and Consumer Commission has issued a position paper which concludes that there should be a partial revocation of an agreement which exempts a group of cargo shipping lines from some of the anti-competitive provisions of the Trade Practices Act 1974.
After an investigation into the conduct of members of the Asia-Australia Discussion Agreement, the ACCC concludes that the AADA's power to legally fix prices should be disallowed. The investigation followed allegations from Australian importers of unreasonable increases in freight rates for cargo being shipped from North East Asia to Australia.
"The rates implemented by the members of AADA in July, August and October 2003, increased the cost of shipping containers by approximately 100 per cent over market rates that existed in June", ACCC Chairman, Mr Graeme Samuel, said today.
"The price increases observed in 2003 have resulted in significant cost increases for Australian businesses importing goods from China, Hong Kong and Taiwan.
"The ACCC investigation has reached a preliminary view that the anti-competitive detriment associated with AADA's price increases outweighed any public benefit provided by the AADA's exemption.
Part X of the Act allows international shipping cargo operators a special exemption from several laws that prohibit anti-competitive conduct.
The exemption is granted as the public benefits in terms of improved scheduling and certainty of services are considered to outweigh any anti-competitive detriment.
However, the ACCC has a responsibility to investigate situations where the exemption may have been used to unreasonably raise prices.
Following a public consultation process, the ACCC will determine its final position. The ACCC will then report its findings to the Minister for Transport and Regional Services, Mr John Anderson. The Minister can decide to accept or reject the ACCC's recommendation.
The ACCC will now begin a consultation period and is calling for submissions from interested parties on its position paper.
The closing date for submissions is 30 April 2004. These submissions will be taken into account by the ACCC before it reports to the Minister.