Dumping or abuse of power, under analysis

Ecuadornews:

The Superintendence of Market Power Control already analyzes the competition between the ports and if their tariffs are in accordance with the rules of what is considered legal. But the strategy of a new player, DP World, alerts the sector.

The company DPWorld Posorja, of Dutch and Ecuadorian capitals, has started negotiations to have a shipping line operating since mid-2019. And it seeks to”compensate” them, to cushion the cost of transporting a container from Posorja to Guayaquil, which costs between $ 390 and 400 for 110 kilometer sof route along the highway.

That can be considered unfair competition, or dumping, since a service would be offered for a price lower than the cost. Or abuse of market power, since having many terminals in the world could use these practices to offer cheaper services in Ecuador, but affecting the rest of the competitors.

This newspaper learned that there is already a shipping line to which DPWorld has offered to compensate some of what it would cost the importer or client to bring the cargo by land to Guayaquil, which does not happen with the cargo that arrives directly at Guasmo, Fertisa, the Trinitaria, to the authorized privateterminals and to the state ones managed by Contecon and Andipuerto.

According to experts there are two alleged crimes to investigate: abuse of market power and dumping. The Superintendency of Market Power Control may in these cases actex officio or after a lawsuit. This reduction of tariffs by the private operator in Posorja could affect the State, which receives benefits according to income.

Today, the Superintendency carries out a study of the competition in the port sector, but it is not known if it has taken DPWorld into account in this analysis.

If sucha crime is found, the authorities may impose sanctions, depending on the amount of the damage to the other competitors in the market.

Jorge Velásquez, principal of DPWorld, has told América Economía that the company analyzes the land tariff to Posorja and evaluates how to compensate the operational cost with the transportation of the shipping lines to the final destination. EXPRESO knew that it offers a monetary value per mobilized container.

The delegation of the port of Posorja on the part of the Government of Rafael Correa has been questioned by several things: the previous regime said that it signed with a company of the dubaití government, when it is a private company;the law firm of Alexis Mera was accused of having performed the legal operation of the contract; DPWorld wanted exclusivity, and to close the other ports in the city.

Details

Transport

Bringinga container from Guayaquil to the Posorja parish is expensive for importers and exporters, a cost that they do not have when they embark on traditional terminals such as Contecon, TPG, Fertisa, Naportec, QC Terminals, An dipuerto,Puerto Hondo or Storeocean.

Dumping

Unfair competition is a condemned practice in the business world and means offering a service or product at a value lower than the cost. This has been used in the world to take competitors out of the market, take over this and then put conditions that affect users. (I)

Source: https://www.expreso.ec/economia/poder-mercado-economia-competencia-desleal-CC2499477