NORTHERN Australia specialist Sea Swift has given the ACCC a court-enforceable undertaking after the Commission found elements of shipper contracts were anti-competitive.
The ACCC was concerned elements of Sea Swift’s contracts with customers to supply essentials to remote coastal communities could significantly increase the cost of living in communities, including to First Nations Australians. The company has acknowledged the ACCC’s concerns that its conduct may breach competition laws.
As a result of the ACCC’s investigation, Sea Swift has undertaken to amend its contract terms to remove restrictions stopping other suppliers of scheduled sea freight services in the Northern Territory and Far North Queensland from competing for customers and entering the market.
“Sea freight is literally a lifeline for many remote communities in supplying fresh produce and medical supplies. We had significant concerns about the impact that restrictions on competition in the supply of sea freight services can have on people living in remote communities, including First Nations Australians,” ACCC Commissioner Luke Woodward said.
“If remote businesses have only one supplier of essential services or goods, that supplier has few restrictions on the price it can charge, and consumers are often charged a higher price than they would in a competitive market.”
Mr Woodward said this work formed part of the ACCC’s our engagement with the National Indigenous Australians Agency (NIAA) to support remote communities having reliable access to affordable food and other essentials.
“The amended contract terms will give customers the flexibility to use alternative freight service providers, including the option to transport smaller, ad hoc volumes by sea or road,” he said.
The ACCC was concerned that, by entering into long-term exclusive agreements with staggered end dates, and with some requiring customers to let Sea Swift match any competitor’s proposal, Sea Swift misused its market power and engaged in prohibited anti-competitive exclusive dealing conduct.
“We considered that these contracts could have prevented other freight service suppliers from growing large enough to viably compete, and that Sea Swift’s conduct had the substantial purpose, effect, or likely effect of substantially lessening competition,” Mr Woodward said.
The ACCC has accepted a court-enforceable undertaking from Sea Swift that it will amend its existing and future contracts to remove any anti-competitive clauses. The company will also inform customers in emails and on its website of the details and implement a compliance program.
In 2016, the Australian Competition Tribunal authorised Sea Swift’s acquisition of marine freight assets of Toll Marine Logistics Australia on the basis of a net public benefit test, subject to certain conditions. This resulted in Sea Swift being in a near monopoly position for the supply of sea freight services to the Northern Territory and Far North Queensland at that time.
The ACCC had previously opposed the acquisition due to concerns the acquisition was likely to have the effect of substantially lessening competition.
The ACCC says it has been engaging with the NIAA to discuss its ongoing work arising from the Government response to the 2020/21 House of Representatives Standing Committee on Indigenous Affairs inquiry into food prices and food security in remote Indigenous communities. This includes the NIAA’s development of the remote stores low-cost essentials subsidy scheme.