Cartel risk warning on terminal surcharge resistance

Legal expert says costs calls may leave industry players vulnerable

A potential risk to port haulage and cargo interests and their representative organisations has been raised over calls to pass on ‘infrastructure surcharges’ imposed by stevedores and other terminal operators.

While it may be self-evident that container haulage firms should pass on the extra cost of these charges and while industry bodies such as the Victorian Transport Association (VTA) have advised as much, noted transport industry lawyer and Holding Redlich partner Nathan Cecil warns any such decision must be made individually or attract possible anti-cartel regulatory action.

"The commercial reality is that road transport and logistics companies cannot simply continue to absorb every such cost increase," Cecil says in a personal LinkedIn commentary.

"Profitability dictates that at some point and to some extent, additional and increasing costs will have to find their way into increased costs to users of those services. Many industry advocacy groups and leaders have commented on this.

However, industry advocacy groups and individual road transport and logistics companies should be careful to avoid any suggestion that they 'get together' and 'agree' to pass on these charges.

Whilst this is undoubtedly sensible and a likely commercial outcome, road transport and logistics companies should remember that any pricing or charge structuring decisions need to be made individually and not in concert with other competitors.

Where competitors within a sector 'get together' and 'agree' on pricing or charge structuring, this may constitute unlawful cartel conduct in the nature of 'price fixing'. Price fixing can result in prosecution and very significant penalties.

Cecil points to action taken against air cargo operators in Australia and globally over agreements a decade ago over fuel and security charges, insurance surcharges and customs fees which ended up costing participants billions of dollars in fines.

"Where competitors within a sector 'get together' and 'agree' on pricing or charge structuring, this may constitute unlawful cartel conduct in the nature of 'price fixing'," he notes, adding: "So, whilst the commentary to date is probably on the money and very sensible, just remember that even if all industry operators end up getting to the same place, it is important that you do so on your own and not in concert with others."

In a separate article on Holding Redlich’s website, examples of where associations have come to grief in other sectors are noted.

Stevedore surcharge opponents include the VTA, Container Transport Alliance Australia (CTAA), Road Freight New South Wales (RFNSW) and the Freight & Trade Alliance (FTA).

While there has been a recognition in certain quarters of the cartel risk, Cecil and Holding Redlich lawyer Stephanie Triefus note, without identifying sources, that some discussion "runs the risk of sailing very close to the wind from a compliance perspective".

Ironically, they also see cartel problems for container shipping lines, which are often said to share responsibility for issues landside enterprises have with stevedores.

That piece is located here.

According to Holding Redlich, Cecil works across the transport and logistics sector, predominantly for transport owners and operators, such as road transport operators, logistics providers and shipping lines. He advises the Australian Trucking Association (ATA) and Road Freight NSW (RFNSW) on various issues and sits on the board of TruckSafe. Nathan has previously given advice to Patrick, but not in relation to its container terminal operations or surcharge structure.

Surcharge opponents have been contacted for comment.

Published by Nathan Cecil

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