THE Federal Court on 4 May declared by consent that TasPorts engaged in conduct that had the “likely effect of substantially lessening competition in the markets” for towage and pilotage services in northern Tasmania in proceedings brought by the Australian Competition and Consumer Commission.
The court declared TasPorts had breached section 46 of the Competition and Consumer Act (CCA) by imposing a new port access charge on one of its customers, Grange Resources, after Grange notified TasPorts that would switch to Engage Marine for the provision of towage and pilotage services.
Before Engage Marine entered the market, TasPorts was the sole provider of towage and pilotage services in Tasmania.
In a statement, the ACCC said TasPorts did not have a legal right to impose the new port charge. TasPorts also sought to impose the charge without conducting a full assessment of the cost of providing access services to Grange.
“There was a real commercial likelihood that if Grange agreed to pay the port charge, this would have the effect of raising Grange’s future costs of acquiring services from Engage Marine,” the statement said.
ACC chair Rod Sims said: “This is an important decision because port services play a pivotal role for the Tasmanian economy, and this is the first time a corporation has been declared to have breached the revised misuse of market power law.”
TasPorts has also provided the ACCC with a court-enforceable undertaking. It requires TasPorts to ensure that Engage Marine has access to berth space for tug boats at Inspection Head in northern Tasmania on reasonable commercial terms, and that charges imposed by TasPorts on Grange for regulatory functions at Port Latta are reasonable. The undertaking also provides that TasPorts will spend at least $1 million on the wharf infrastructure at Inspection Head.
In the circumstances, the ACCC agreed not to press for a penalty order, but the court ordered TasPorts to pay a contribution to the ACCC’s costs.
“Accepting this consent outcome ensures towage customers in northern Tasmania will receive the benefits from competition quickly. This competition should make a real difference at Tasmanian ports, ultimately to the benefit of consumers,” Mr Sims said.
“Businesses with substantial market power have a special responsibility when deciding how to respond to competitive threats. If they respond in a competitive way, for example by offering customers better products at better prices, they will not face the risk of enforcement action. However, when they hinder a competitor from competing on its merits, the ACCC will not hesitate to take enforcement action.”
This is the first finding of a contravention of Section 46 of the CCA since it was amended in 2017.
TasPorts confirmed that it had resolved a case with the ACCC following mediation on the basis that TasPorts will pay no penalty.
TasPorts CEO Anthony Donald said the company was pleased to have resolved the case.
“TasPorts’ focus, at all times, is maintaining the highest standards of maritime safety and environmental management in accordance with our regulatory obligations,” he said.
As part of the mediated settlement, TasPorts admitted one of the breaches alleged by the ACCC concerning a proposed tonnage charge for Port Latta, in North West Tasmania.
“Tonnage charges for Port Latta are a unique legacy issue that dates back to the Marine Board of Hobart and Circular Head, prior to the formation of TasPorts in 2006,” Mr Donald said.
“TasPorts is pleased to now move towards normalising those arrangements consistent with other ports around the state.”
The case was finalised in a hearing in the Federal Court on 4 May 2021. TasPorts was represented in the matter by Matthew Lees of law firm Arnold Bloch Leibler and Michael Hodge QC.
In a statement, Engage Marine said the decision encourages competition in the Tasmanian towage market.
“It ensures port users have access to a choice of towage providers, ensuring competitive tension on both price and the quality of service,” the statement said.
“Engage Marine welcome this opportunity to expand their services within Tasmania and this decision provides a roadmap to deliver our existing and potential customers the high quality and competitive service we deliver at other ports across Australia.”