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Cade condemns port operators for abuse of dominance

Administrative Proceeding

Companies charged unnecessary fees under the claim of additional services
by Assessoria de comunicação published: Aug 16, 2018 04:04 PM last modified: Aug 16, 2018 04:04 PM

The Administrative Council for Economic Defense (CADE in its acronym in Portuguese) condemned Rodrimar and Tecon Rio Grande for abuse of dominance, on the ground that the companies charged abusive fees in port services. Due to the anticompetitive conducts, CADE imposed fines to the companies summing up to BRL 5,7 million.

Rodrimar and Tecon Rio Grande - operators of the port terminals of Port of Santos (SP) and Rio Grande (RS), respectively - are responsible for the loading and unloading of ships. The companies hold the monopoly of the handling and logistics of goods unloaded in their terminals.

Furthermore, the companies also operate in the storage of containers, which keeps the products safe until they are ready for exportation or importation. In this market, companies compete with so-called bonded warehouses, places inside or outside the primary zone of the port that also offer storage services.

In Rodrimar's case, the company charged the bonded warehouses the fee for the segregation of import containers destined to other customs areas, known as Terminal Handling Charge 2 (THC 2), besides the usual movement fee known as Box Rate.

Tecon, in its turn, charged the "Faithful Deposit" fee, to be paid by the customs office for imported merchandise or products returning from abroad and unloaded in their terminal, beside the Box Rate fee.

Judgment

Paulo Burnier, the Reporting Commissioner responsible for the proceeding involving Rodrimar, explained in his vote that the fee charged is harmful to the free competition. Furthermore, he highlighted that the seriousness of the situation is proven by the context in which it was practiced, given the key role that the sector plays in the trade of imported merchandise in the country.

According to Burnier, taking advantage of its monopolist position in the management of the containers, Rodrimar imposed the charge of THC2 to increase revenue and place hurdles to competitors.

"The conduct increases rivals' costs in an arbitrary way, with the possibility of excluding competitors and the decrease of the quality of the service offered in the container storage market".

CADE’s Tribunal, by the majority, followed the Commissioner's opinion and applied to the company a fee of BRL 972.961,17. Furthermore, the council determined that Rodrimar shall abstain from charging for the liberation of containers from independent customs enclosures, under the penalty of a daily fine of BRL 20.000,00, in case the fee is still charged after the Tribunal's final decision.

The proceeding regarding Tecon Rio Grande, in its turn, was reported at the time by Commissioner Alexandre Cordeiro. In his vote, he stated that the "Faithful deposit" fee charge has the potential to falsify the market, bringing harm upon competitors.

"In a nutshell, this conduct has the potential to discriminate an increase the costs of rivals, to rule out market agents, decrease the incentive to newcomers and increase the general level of prices. Consequently, the increase in bonded storage costs has the capacity of generating raises in all consuming chain of imported products or products with imported supplies, raising overall costs of many sectors of the national economy", he explained.

The Tribunal, by the majority, followed the vote of the Reporting Commissioner and applied the fine of BRL 4.788.450, 00. The Council also determined that Tecon Rio Grande shall abstain from charging for the liberation of containers from independent customs enclosures, under the penalty of a daily fine of BRL 20.000,00, in case the fee is still charged after the court's final decision.