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First Cease and Desist Order issued on Northport

Media Release

Issued 14 August 2006/021

First ever Cease and Desist Order issued against Northport

Cease and Desist Commissioner Terence Stapleton has issued the first Cease and Desist Order to be made under the Commerce Act. The Commerce Commission sought the order against port owner Northport Limited for activities at Marsden Point port in Whangarei. Northport has consented to the order.

Marsden Point port is used to export wood veneer to Japan from the Juken Nissho factory in Kaitaia.

The Commission investigated after International Stevedoring Operations Limited complained that Northport had granted an exclusive licence to its own joint venture port services company Northport Services Limited and was making it uneconomic for other companies to marshal cargo at the port.

The order issued on Friday 11 August requires Northport to allow other companies to provide marshalling services at the port.

Commerce Commission Chair Paula Rebstock said that Northport had attempted to use its monopoly power as the owner of the port to prevent competition in the general cargo marshalling services market.

“Northport has attempted to leverage its monopoly power as the port owner to exclude competition in the downstream market for port services,” says Commerce Commission Chair Paula Rebstock.

“Section 36 of the Commerce Act prohibits companies from using their market power in this way,” Ms Rebstock says.

“Other companies must be allowed to compete with Northport’s own joint venture port services company,” says Ms Rebstock.

Since the order was issued, Northport has allowed competitors to marshal at the port. As the anti-competitive behaviour has ceased, the Commission has decided it will take no penalty action against Northport at this time.

This is the first Cease and Desist Order issued since the Cease and Desist regime was introduced into the Commerce Act in 2001. The regime enables a Cease and Desist Commissioner to order parties to stop behaviour that is a prima facie breach of the Commerce Act, provided it is necessary to act urgently.

The Commission considered that Northport’s actions were a prima facie breach of section 36 of the Commerce Act, and sought the order on that basis.

Ms Rebstock said that Cease and Desist orders allow swift action against anti-competitive behaviour to avoid detriment to competition.

“This order was issued within a month of the Commission’s application and has promptly restored competition in the market for marshalling at the port,” Ms Rebstock says.

Background
The Cease and Desist Commissioner determines matters independent of the rest of the Commission. Terence Stapleton is a barrister who has been a Cease and Desist Commissioner since March 2002.

Based on the exclusive arrangement it had with NSL, in January 2006 Northport initially denied International Stevedoring Operations Limited (ISO) access to its facilities to provide marshalling services. When ISO threatened to take legal action against Northport on this possible refusal of access, Northport agreed to an interim arrangement whereby ISO could marshal goods at Marsden Point Port if goods were stored off the port and transferred to shipside by truck, but could not be re-configured by the use of forklifts on the wharf and on a shipment by shipment basis. This was a significantly more costly means of marshalling goods.

Northport Limited (Northport) is the owner and operator of Marsden Point Port, the only major port in Northland. Northport Services Limited (NSL) is 67% owned by the parent companies of Northport and 33% owned within the Carter Holt Harvey group, is a provider of on-wharf services including marshalling services at Marsden Point Port. Marshalling services for exports comprise the receipt of cargo from road (or rail), storage, assembly and sorting of cargo in preparation for delivery to a ship’s berth for loading by a stevedore. (Stevedoring services comprise the loading of cargo onto and discharging cargo from ships.)
International Stevedoring Operations is a stevedoring business, with operations in ten ports in New Zealand. It provides stevedoring and marshalling at Marsden Point Port in competition with NSL.

An explanation of the cease and desist regime can be found on the Commission’s website at
http://www.comcom.govt.nz/BusinessCompetition/Anti-competitivePractices/
ceasedesistguidelines.aspx

ENDS

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