The changing face of the terminal operator business

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2 A brief overview of European competition law on M A. In Australia mergers and acquisitions are dealt with under s 50 of the Trade. Practices Act which provides that a corporation must not acquire shares or assets if. that acquisition would have the effect of substantially lessening competition in a. market In Europe there are several types of merger cases subject to the EU. competition law provisions regarding Mergers and Acquisitions. those dealt with under the Council Regulation EC No 139 2004 in force since 1. May 2004 generally referred to as the EC Merger Regulation. those dealt with under the old Council Regulation EEC No 4064 89 as last. amended by Council Regulation EC No 1310 97, those dealt with under Article 66 of the former Treaty establishing the European. Coal and Steel Community ECSC Treaty, Table 1 Some M A and JV cases in the terminal operating industry. M 3884 ADM POLAND CEFETRA BTZ 2005 Privatisation of a grain and animal feed terminal in. the port of Gdynia Poland Given the public nature of the terminal the Commission was satisfied that. after the transaction BTZ will remain open to all interested parties that wish to use its services. M 3848 SEA INVEST EMO EKOM 2006 The European Commission cleared Sea Invest s. proposed acquisition of joint control in EMO EKOM Both companies are cargo handling companies mainly. active in the loading unloading and storage of iron ore and coal Among others Sea Invest has sole. control over the ABT terminal in Antwerp which provides cargo handling services for coal iron ore and. other dry bulk EMO EKOM is a Dutch joint venture providing cargo handling services for coal and iron ore. in the port of Rotterdam, M 3576 ECT PONL EUROMAX 2004 This case related to the joint exploitation of the new. Euromax terminal in the port of Rotterdam by ECT and P O Nedlloyd. M 3379 P O ROYAL NEDLLOYD P O NEDLLOYD 2004 The Commission cleared termination. of the joint venture between P O and Royal Nedlloyd The Commission did not identify any anti. competitive consequences stemming from this transaction on the market for containerised liner shipping. services The creation of PONL was approved by the Commission in December 1996 as it concluded that. no anti competitive impact would arise in the markets of container liner shipping and stevedoring services. M 2859 DEUTSCHE BAHN CARGO CONTSHIP ITALIA JV 2002 The Commission cleared the. creation of a joint venture between German railway operator Deutsche Bahn and Contship Italia SpA a. port terminal operator and provider of transportation of containerised goods in Italy The new company. will provide international intermodal transport of containers between Italian ports and the premises of. customers in Austria Switzerland and Southern Germany The analysis carried out by the Commission. indicated that the vertical relationship with the parent companies did not pose any particular concern. M 1277 BLG CONTAINER MAERSK SEA LAND SERVICE 1998 Aborted redrawn. M 2632 DEUTSCHE BAHN ECT INTERNATIONAL UNITED DEPOTS JV 2002 The European. Commission approved the joint operation of two adjoining barge terminals in Duisburg DeCeTe and ECT. Duisburg by German railway company Deutsche Bahn Rotterdam based Europe Combined Terminals. ECT and United Depots of Hamburg The joint venture is the largest provider of these kinds of services in. the Ruhr region in Germany But the Commission s investigation showed that there will remain sufficient. competition, M 2422 HAPAG LLOYD HAMBURGER HAFEN UND LAGERHAUS HHLA CTA 2001 The. European Commission authorized the creation of a joint venture by Hamburger Hafen und Lagerhaus. Aktiengesellschaft HHLA and Hapag Lloyd AG Hapag Lloyd HHLA operates in the field of port transport. and includes among its activities the management of three container terminals at the Port of Hamburg. Hapag Lloyd s activities include liner and passenger shipping The joint venture HHLA CTA runs the. Altenwerder container terminal in Hamburg Given the market position of the notifying parties and taking. account of vertical aspects the proposed transaction will not lead to the creation or reinforcement of a. dominant position, Source based on online information EC DG Competition.
Under Council Regulation EC No 139 2004 corporate reorganizations are to be. welcomed to the extent that they are in line with the requirements of dynamic. competition and capable of increasing the competitiveness of European industry. improving the conditions of growth and raising the standard of living in the. Community This specific legal instrument has been developed as Articles 81 and 82. of the Treaty of Rome are not sufficient to control all operations which prove to be. incompatible with the system of undistorted competition envisaged in the Treaty. The key points in Regulation EC No 139 2004 can be summarized as follows. The Regulation applies to all concentrations with a Community dimension A. concentration has a Community dimension where a the combined aggregate. worldwide turnover of all the undertakings concerned is more than EUR 5 000. million and b the aggregate Community wide turnover of each of at least two. of the undertakings concerned is more than EUR 250 million Article 1 2. Article 5 sets the rules for the calculation of the turnover. A concentration which would significantly impede effective competition in the. common market or in a substantial part of it in particular as a result of the. creation or strengthening of a dominant position shall be declared incompatible. with the common market Article 2 3 The notion of significant impediment to. effective competition should be interpreted as extending beyond the concept of. dominance only to the anti competitive effects of a concentration resulting from. the non coordinated behaviour of undertakings which would not have a dominant. position on the market concerned The concept of concentration covers. operations bringing about a lasting change in the control of the undertakings. concerned and therefore in the structure of the market Joint ventures performing. on a lasting basis all the functions of an autonomous economic entity are. Concentrations which by reason of the limited market share of the undertakings. concerned are not liable to impede effective competition may be presumed to be. compatible with the common market Without prejudice to Articles 81 and 82 of. the Treaty an indication to this effect exists in particular where the market. share of the undertakings concerned does not exceed 25 either in the common. market or in a substantial part of it, To ensure effective control undertakings should be obliged to give prior. notification of concentrations with a Community dimension following the. conclusion of the agreement the announcement of the public bid or the. acquisition of a controlling interest, When the Commission issues a decision declaring that the concentration is. incompatible with the common market the Commission may take measures. appropriate to restore or maintain conditions of effective competition as. explained in Article 8, Article 9 deals with the referral of a notified concentration to the competent. authorities of a Member State This is the case for concentrations that do not. have an impact on the common market but on a distinct market in a Member. State For example the merger case between stevedoring companies Hessenatie. and Noordnatie in 2000 was under jurisdiction of the Belgian competition. authorities Under Article 22 one or more Member States may request the. Commission to examine any concentration that does not have a Community. dimension within the meaning of Article 1 but affects trade between Member. States and threatens to significantly affect competition within the territory of the. Member State or States making the request, An overview of some important cases in the terminal handling industry is given in. 3 Horizontal integration in the market towards terminal networks. 3 1 Consolidation in the container terminal industry. The terminal and stevedoring industry is confronted with bigger and fewer shipping. lines demanding more for less Shipping lines exert growing demands in terms of. terminal productivity priority servicing and flexibility while at the same time. insisting on getting landside costs down The loyalty of a port client cannot be taken. for granted, Partly in response to the financial and operational needs of modern terminal.
activities the container terminal operating industry has witnessed an increased. amount of consolidation in recent years Recent examples are. Dubai based DP World acquired the terminal portfolios of CSX World Terminals. 2005 and P O Ports 2006 for a total amount of more than 8 billion US. Dollars These two acquisitions have given DP World a significant presence on the. container handling scene in China Hong Kong South East Asia Australia the. Americas and Europe In fact DP World now has a very balanced terminal. portfolio covering most of the world s trading regions which should protect it. against the risk of a downturn in any one particular region. PSA acquired a 20 stake in Hutchison Port Holding s global terminal portfolio for. a reported USD 4 93 billion following its earlier purchase of strategic. shareholdings in a number of other Hong Kong operations HIT Cosco HIT. Container Terminal 3 and Container Terminal 8 in 2005 It will be interesting to. follow up on the future relation between PSA and HPH One just has to imagine. the combining of buying power supplier power tendering power and operational. Table 2 Throughput of top 10 global container terminal operators for. selected years,Operator m teu share Operator m teu share. Hutchison 29 3 11 8 Hutchison 51 8 13 0,PSA 19 5 7 9 APM Terminals 40 4 10 1. APM Terminals 13 5 5 5 PSA 40 3 10 1,P O Ports 10 0 4 0 P O Ports 23 8 6 0. Eurogate 8 6 3 5 Cosco 14 7 3 7,DPA 4 7 1 9 DP World 12 9 3 2. Evergreen 4 5 1 8 Eurogate 12 1 3 0,Cosco 4 4 1 8 Evergreen 8 7 2 2.
Hanjin 4 2 1 7 MSC 7 8 2 0,SSA Marine 4 0 1 6 SSA Marine 7 3 1 8. Top 10 102 7 41 5 Top 10 219 8 55 1,Source Drewry Shipping Consultants 2003 2006. Increasing consolidation has not missed its effect whereas a few years ago the. container handling sector was still rather fragmented and characterized by about 10. big players the picture looks drastically different today Table 2 provides an. overview of the top 10 global terminal operators for the years 2001 and 2005. Whereas the volume handled by the top 10 players amounted to 103 million TEU in. 2001 for a market share of 42 these figures had risen to about 220 million TEU. and 55 respectively in 2005, The worldwide container handling industry is nowadays dominated by four worldwide. operating companies with an enormous lead over their rivals in terms of throughput. and market share When the P O Ports portfolio is added to DP World s the. combined throughput of the top 4 operators amounted to nearly 170 million TEU in. 2005 representing some 42 of total worldwide container handling To put this in. perspective in 2001 the market share of the top 4 operators was still below 30 As. far as the concentration of market power is concerned the current situation in the. terminal operating sector is somewhat comparable to that of the liner shipping. industry where the four largest shipping lines also control some 40 of the market. expressed in the number of TEU slots deployed The current European portfolio of. leading container terminal operators is presented in Figure 1 The financial. involvement varies between full ownership to minority shareholdings. Figure 1 European terminal portfolio of some leading terminal operators. Felixstowe Hamburg,Harwich Gdynia,Thamesport Bremerhaven. Tilbury Rotterdam,Southampton Antwerp,Le Havre Zeebrugge.
joint venture,Port Synergy met,venture with CMA CGM. Eurogate Constantza,Hutchison PH,PSA incl HNN Voltri PSA 70 APM T 30 Venice. Genoa Mersin,Ports Ravenna,APM Terminals,Marseilles Livorno. Port Synergy met,joint venture CMA CGM,joint venture. with CMA CGM,Lisbon Barcelona,Verdere betrokkenheid.
PSA is een vraagteken,Cagliari Gioia Tauro,Eurogate 76 APM T 24. Algeciras Cagliari,Marsaxlokk,sinds eind 2002 Medcenter Eurogate 67 APM T 23. Source Notteboom Port Synergy,Source Notteboom ITMMA. Given the fact that there are no really big companies left to acquire nowadays it can. be expected that the top 4 players will maintain their lead over the other operators. for quite a number of years to come Spurred by the shortage of terminal capacity in. some parts of the world making existing terminals very attractive for investors as. well as high profitability levels enjoyed by terminal operators1 merger and. acquisition activity in the container handling sector is likely to continue in the years. to come albeit on a smaller scale than witnessed recently. When it comes to takeovers of ports terminals or terminal operators more and. more financial suitors banks hedge funds private equity groups and investors are. directly taking part in the bidding a completely new development also seen in other. lines of business Examples of recent deals involving such players are listed in Table. Table 3 Takeover of port operations involving financial suitors. Company Took over Price, American International Group Activities of P O USA including 6 container terminals Dec 2006 USD 1 01 bn. The changing face of the terminal operator business lessons for the regulator Prof Dr Theo Notteboom President Institute of Transport and Maritime Management Antwerp ITMMA University of Antwerp Belgium Theo notteboom ua ac be www itmma ua ac be 1 Introduction The market environment in which container ports and shipping lines are operating is substantially changing One of the main

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