Authority Decision of 4 August 1992 relating to a proceeding under Section 4 of
the Competition Act.
No. CA/11/92 - Waterford Harbour
was made by Waterford Harbour Commissioners on 1 April 1992 with a request for
a certificate under Section 4(2) of the Competition Act, 1991 in respect of an
agreement with Bell Lines Ltd. for the priority use of harbour facilities in
of intention to take a favourable decision was published in the "Irish Times"
on 3 July 1992. No submissions were received from interested parties.
of the Notification
agreement involves the proposed building of a new container port in Waterford
harbour. The necessary capital is being put up by the Harbour authority with a
contribution also coming from EC structural funds. It is proposed that Bell
Lines will have priority use of the new facilities and that they will pay to
the authority, over the period of the agreement, sufficient monies to cover the
capital outlay and associated interest costs incurred by the harbour authority.
parties to this notification are Waterford Harbour Commissioners and Bell Lines
principal activities of Bell Lines consist of the provision of shipping
services between Ireland, the United Kingdom and the continent of Europe. Its
turnover is estimated at £130m and it employs approximately 800 people.
Harbour Commissioners operates under the Harbours Act, 1946. As a harbour
authority, it is responsible for the management, control and operation of the
port as well as providing the necessary facilities and accommodation for port
users. Its turnover in 1991 was £1.4m.
operating revenue of Waterford Harbour Commissioners is made up mostly of rates
imposed on goods imported and exported. Tonnage rates are also applied to
vessels entering or using the harbour. In 1990, the rates on imports and
exports were approximately £1.02m, 72 per cent of its total revenue of
£1,416,375. Tonnage rates accounted for approximately £0.2m (14% of
revenue). The remaining revenue was made up of rates relating to cranage,
storage, weighbridge, water to ships and pilots' administration charges.
1990, the authority had an operating surplus of £208,000. Financial
charges and charges for exceptional items reduced this figure to a deficit of
Harbours Act, 1946 is, in effect, a consolidating Act, formally establishing
the State's 25 harbour authorities, including Waterford. Section 47 of that
Act defines the general duties of the authorities as follows:
harbour authority shall take all proper measures for the management, control
and operation of their harbour and shall provide reasonable facilities and
accommodation therein for vessels, goods and passengers.
harbour authority shall take all proper measures for the maintenance and
operation of all works, structures, bridges, equipment and facilities under
authorities are obliged to impose charges for their services, necessary to
cover maintenance and development costs as well as personnel expenses. Section
94 of the Harbours Act provides that:
to the provisions of this Act, a harbour authority may charge the following
rates in respect of the following subjects of charge:-
(in this Act referred to as tonnage rates) calculated by reference to tonnage
in respect of a vessel which -
(i) enters within the limits of the harbour of the harbour authority, or
(ii) uses any quay in such harbour, or
plies within the limits of such harbour;
(in this Act referred to as goods rates) in respect of goods shipped,
transhipped or unshipped within the limits of the harbour of the harbour
(in this Act referred to as service rates) in respect of shipping, unshipping,
transhipping, warehousing, acting as warehouse keepers, wharfage, cranage,
receiving, landing, re-landing, piling, housing, weighing, measuring,
coopering, sampling, unpiling, unhousing, unloading, carrying, conveying,
loading, repairing, protecting, watching, delivery or any other work done or
service rendered in relation to goods.'
96 provides that rates be charged equally in respect of the same classes of
vessels and goods. In addition, harbour authorities may charge for the use of
any facility or accommodation provided for passengers (s. 47(3)), for
facilities such as tenders, life boats, etc., provided by them (s. 49(2)), for
ballast (s. 52). They may also licence boats to ply for hire in the harbour
and charge for such licences (s. 53(1) and (2)). Section 104 allows the
Minister for the Marine to fix maximum rates for a harbour or to fix the basis
on which rates are to be computed. Section 119 deals with the application of
revenue of harbour authorities.
harbour authority may appropriate any part of their harbour (including, in
particular, any of the following or any part thereof, that is to say, any dock,
pier, quay, wharf, jetty, boatslip, works, plant or equipment) to the exclusive
use of any person, trade or class of vessels and may make any such
appropriation either gratuitously or in consideration of the payment to them of
such charges as they consider reasonable.'
facilities provided by a harbour authority in respect of their harbour shall,
subject to the provisions of this Act and anything done thereunder and to the
bye-laws for the time being in force in respect of their harbour, be available
equally to all persons on payment of the appropriate rates.'
function of Waterford Harbour Commissioners is to provide and maintain the
necessary facilities for the use of Waterford Port by those wishing to import
and export goods by ship. Bell Lines operate a container ship service from
Waterford to Britain and mainland Europe. Bell Lines also provide stevedoring
services in the port which they operate on a twenty-four hour day, seven day
week, three hundred and sixty-four day a year basis. The notification is
concerned with the provision of shipping services to and from Britain and
of External Trade by Ports, 1990
value % by volume %
16.1 56 0.2
19.5 6,432 21.0
64.3 24,050 78.8
100 30,538 100
CSO; 'Analysis of External Trade by Ports', Irish Statistical Bulletin,
September 1991, p. 428.
1990, the value of Ireland's external trade was £26,040m. As Table 1
illustrates, 64.3% (£16,753m) of this trade was conducted through the
country's seaports. This represents 78.8% of the total tonnage of 30.5 million
tonnes. By contrast, airports accounted for just 16.1% (£4,198m) of
external trade by value and represented only 0.2% of its weight. This reflects
the fact that air freight is not an economically viable transport mode for
heavy or bulky items.
Distribution of External Trade by Country, 1990
Value By Volume
European Countries 40.2 30.4
other Countries 22.0 20.7
CSO; 'Analysis of External Trade by Ports', Irish Statistical Bulletin,
September 1991, p. 428.
value terms 33% of external trade in 1990 was with Britain while 40% was with
other European countries. Only 5% of Irish external trade was with Northern
Ireland, yet as Table 1 illustrates almost 20% of Irish external trade passed
through the land frontier stations with Northern Ireland. This apparent
discrepancy is due to the fact that a sizable proportion of Irish trade travels
through Northern Ireland ports. Over 14% of Irish trade was shipped through
Northern Ireland ports in 1990.
the total weight of goods handled through Irish ports in 1990, 5.2% (1.3
million tonnes) was dealt with by Waterford port (Table 3). This is much less
than the figures for the major ports of Dublin and Cork (25.0% and 21.2%
respectively) but similar to the neighbouring harbours of New Ross (3.6%) and
of Goods Handled Through Irish Ports, 1990
Drogheda, Dundalk, Dun Laoghaire, Greenore & Wicklow.
CSO; 'Statistics of Port Traffic in 1990', Irish Statistical Bulletin,
are five different categories of traffic through Irish ports. Three of these,
bulk liquid, bulk solid and break bulk can be handled through almost any
commercial port. The two remaining categories are Ro-Ro (Roll-on/Roll-off) and
Lo-Lo (Load-on/Load-off). Both deal with the transport of container traffic.
this method a container or trailer is delivered by truck from its point of
origin to its final point of destination. As it is obviously necessary for the
truck to board the ship, special facilities are required which would not be
available at most Irish ports. A variation of this is URO-RO, whereby the
trailer is delivered to the port by truck, loaded onto the ship by port
tractors, and brought to its final destination from the far end by a local
contractor. The only Irish ports with Ro-Ro terminals are Dublin, Dun
Laoghaire, Cork and Rosslare. Table 4 shows that Ro-Ro accounted for 10.3% of
goods handled through Irish ports in 1990.
Lo-Lo, the containers are delivered to the port by either rail or road where
they are stored prior to loading into a ship specific for the purpose. Again,
special facilities are required for provision of this service. Dublin, Cork
and Waterford are the main Lo-Lo terminal ports although a small amount of
Lo-Lo traffic is handled by small ports. Lo-Lo accounted for 12.2% of Irish
CSO; 'Statistics of Port Traffic in 1990', Irish Statistical Bulletin,
biggest users of Waterford port are Bell Lines. They have approached their
business in a very high-tech manner, and, with their unique use of the railways
throughout the country, they are regarded as the most successful Lo-Lo
container carrier between here and the UK and Europe.
They operate a service to their own port, Bell Port on the Usk River near
Newport in South Wales, to the Rosenberg terminal in Rotterdam, and to
Radicatel, a small port near Rouen on the river Seine. Their policy is one of
owning and operating their own berths within ports to strict company policy,
fast and speedy throughput of their containers, and with high emphasis on the
requirements of their customers.
is 6 hours steaming time nearer to the Continental ports than is, say, the port
of Dublin. This gives Bell Lines the advantage of saving 12 hours in any round
trip over and above their competitors using Dublin exclusively.
4 shows that 78.5% of Waterford port's business involves the handling of Lo-Lo
traffic. There are no Ro-Ro facilities available. This table also shows that
64.4% of its business is conducted with mainland Europe. The only other
significant market is Great Britain and Northern Ireland which accounts for a
further 28.9% of its trade.
of Waterford Port Traffic, 1990
of Traffic Tonnage (000's)
Bulk & all other goods 2
Britain & N. Ireland 384
E.C. 855 64.4
E.C. 46 3.5
Trade 43 3.2
Trade 1,327* 100.0
at variance with those of Table 3 because of the absence of figures for coastal
trade (43,000 tonnes) which is not considered significant.
As for Tables 3 and 4.
existing container terminal in Waterford is considered totally inadequate to
the needs of its traffic. It has a design capacity of some 80,000 TEU's per
The throughput at the terminal in 1991 was 130,000 TEU's. Because of the
congestion, new traffic cannot be accepted.
is proposed to construct a completely new terminal approximately 4km downstream
of the existing port facility. The cost of this construction is estimated to
be £17.5m. This project is in receipt of EC Structural Fund grant-aid of
£7.5m. Bell Lines have agreed to pay sufficient income to the Waterford
Harbour Commissioners to discharge the interest and capital cost of the
development in return for priority use of the terminal for an initial period of
fifteen years with an option to renew for a further ten years. The relevant
extracts of the agreement are as follows:
consideration of the several assurances given by the Company as hereinafter
appears the commissioners hereby agree with the Company as follows:-
give to the Company priority use of the Terminal for an initial period of
fifteen (15) years commencing on the date the Belview Terminal becomes
operational subject as hereinafter appears.
grant to the Company on the expiration of the said fifteen (15) year period
referred to in paragraph (a) above an option to obtain Priority Use of the
Terminal for a further period of ten (10) years, which option if exercised
shall be subject to a new Agreement on terms yet to be negotiated between the
the Company exercises such option to renew, then on the basis of the throughput
projections being met, the Commissioners undertake to give to the Company,
during the latter ten year period, a discount on volume. Such discount shall
be based on the effective TEU rate now operating namely and applied to the said
rate indexed in accordance with Clause 4 of this Agreement.
construct and provide at the Terminal a modern Lift-off ("Lo-Lo") facility with
all necessary ancillary services and support systems.
equip the Terminal with adequate cranes.
obtain and perfect all necessary Leases, Licences, Permissions and
Authorisations for the proper and lawful operation of the Terminal including a
Foreshore Lease from the Department of the Marine.
dredge and keep clear all berths at the Terminal and all access Channels to it
including the river bars at Duncannon and Cheekpoint.
repair and put in working order the Workshop and Offices located on the
Premises including the temporary Access Road from the public road. The
Company's right of way over the temporary access road will cease when the new
access road is completed.
3 provides that:
and Interest Repayments
(Capital Charge) the company will provide income to the Commissioners
sufficient to discharge the interest and capital cost of the Commissioners
borrowing to a maximum of Eight and a Half Million Irish Punts for a one gantry
operation and up to Ten Million Irish Punts for a two gantry operation arising
on the construction, provision and development of the Terminal over the loan
period. The income will be in addition to all other payments that the Company
is obliged to make under this agreement.'
Company has also agreed to continue using the existing container terminal at
Frank Cassin Wharf and to continue payments in respect of that facility until
all the capital and interest costs of the extension to the Frank Cassin Wharf
have been paid.
of Third Parties
Minister for the Marine
Minister for the Marine is strongly supportive of the Belview Harbour
Development plan. In addition to EC grants of £9.4m for the harbour
itself, it is envisaged that road and rail links to Belview will also qualify
for EC aid. Borrowings made by Waterford Harbour Commission from the European
Investment Bank in respect of the project are guaranteed by the State under the
State Guarantees Act, 1954. The Department of the Marine has already paid the
Commissioners £200,000 in respect of expenditure already incurred on the
4(1) of the Competition Act states that 'all agreements between undertakings,
decisions by associations of undertakings and concerted practices which have as
their object or effect the prevention, restriction or distortion of competition
in trade in any goods or services in the State or in any part of the State are
prohibited and void'.
Lines Limited is engaged in the provision of shipping services between Ireland,
the United Kingdom and the continent of Europe. It is a subsidiary of the Bell
Group Limited. Bell Lines is engaged in the provision of services for gain and
is therefore an undertaking within the meaning of Section 3 of the Act.
Harbour Commissioners is a statutory authority established under the Harbour
Acts, 1946 to 1976. It is responsible for the care, management and
superintendence of the Port of Waterford. The question is whether it
constitutes an undertaking within the meaning of the Competition Act. Section
3 of the Act defines an undertaking as 'a person being an individual, a body
corporate or an unincorporated body of persons engaged for gain in the
production, supply or distribution of goods or the provision of a service.'
harbour authority is a body corporate. It is engaged in the provision of
services namely harbour facilities and services and, under the Pilotage Act,1913, pilotage services. Pilotage is compulsory for vessels navigating in the
area between Hook Point and Killoteran Pill, County Waterford.
pointed out in paras 10-13 above, a Harbour Authority is empowered to charge
port users for the use of the harbour facilities and for goods shipped through
the port subject to a maximum set by the Minister for the Marine. There is no
provision in the legislation to prevent a Harbour Authority earning a surplus
or profits from the provision of services. The 1985 Green Paper on Transport
Policy noted in its review of the financial performance of the State's harbours
over the five year period to 1983 that 'while all but three of the top fourteen
scheduled harbours were profitable, the surpluses generated tended to be quite
The report notes a decline in port profitability compared with earlier years.
Waterford Harbour Authority has generally generated small surpluses. In 1990
it recorded an operating surplus of almost £209,000 which was reduced to a
deficit of £31,500 after financial charges and, exceptional items
amounting to almost £108,000, were included.
Green Paper notes that the return on capital employed by harbours averaged only
about 2%. It goes on to state that: 'In line with the target set out for
public investment projects in the Public Capital Programme, it is now the
policy that investment proposals by harbour authorities should achieve a
realistic return on investment.'
It is also stated that:
general aim will be to ensure that harbour authorities pay their way by
charging economic rates and thereby produce realistic surpluses which will
enable harbour authorities to:
ongoing maintenance requirements,
dredged depths without Exchequer assistance,
future capital works of a minor nature, and
up reasonable reserves so as to make significant contributions to future major
Authority has previously indicated its views on the definition of an
undertaking in PRS/IMRO
where it stated:
the view of the Authority, it is immaterial whether "profit", in the technical
sense, actually occurs or not. The term "gain" is clearly a wider one than
"profit". In this connection, it is noted that the phrase "engaged for profit"
was used in the Mergers Act, 1978 but this was not repeated in the 1991 Act.
In the view of the Authority the term gain means any consideration or reward in
return for the supply of a good or the provision of a service.'
view has been endorsed by the Supreme Court in its recent decision in Mary
Deane & others v Voluntary Health Insurance Board (29 July 1992) where it
held that the VHI was an undertaking within the meaning of Section 3(1) of the
Competition Act. In that decision Finlay C.J. stated that:
am, therefore, driven to the conclusion that the true construction of this
section is that the words "for gain" connote merely an activity carried on or a
service supplied, as it is in this case, which is done in return for a charge
or payment, and that, accordingly, the Defendant does come within the
definition of an undertaking in the Act of 1991.'
authorities are commercial undertakings which charge port users for the
services they provide and which are legally entitled, and indeed obliged as a
matter of policy, to charge 'economic rates' and produce 'realistic surpluses'.
In the Authority's view, a harbour authority is engaged for gain in the
provision of services since it provides services in return for payment by
harbour users. Waterford Harbour Commissioners is, therefore, an undertaking
within the meaning of Section 3 of the Competition Act.
notified agreement concerns arrangements between Waterford Harbour
Commissioners and Bell Lines for the priority use of a proposed new Lo/Lo
terminal in Waterford harbour. In return Bell Lines have agreed to pay
sufficient income to the Commissioners to cover the capital cost of the
development of the terminal together with any associated interest costs. This
constitutes an agreement between undertakings which has effects within the State.
Effects of the Agreement
the terms of the notified agreement Waterford Harbour Commissioners agrees to
give Bell Lines priority use of the new Lo/Lo terminal to be developed at
Belview for a period of 15 years commencing on the date the terminal becomes
operational. There is also an option to continue Bell Lines' priority use of
the terminal for a further 10 years upon the expiration of the 15 year period.
By priority use it is intended that Bell Lines vessels would have first call on
berthing facilities at the terminal. Bell Lines would also operate the
terminal itself as they do the existing terminal thus providing their own
stevedoring services. The Authority has to decide whether, in its opinion,
such arrangements prevent, restrict or distort competition within the State or
any part of the State.
present only Bell Lines operate a container service from Waterford to Britain
and mainland Europe. Bell Lines' throughput at the existing terminal is
130,000 TEU's while the existing terminals design capacity is for 80,000 TEU's.
Bell Lines operate the terminal on a 24 hour, 364 day per year basis.
new terminal has a design capacity of 250,000 TEU's. The combined design
capacity of the two terminals at Waterford Port will be more than four times
that of the existing terminal. The Harbour authority has indicated that they
hope that other shipping services will use the enlarged port. Bell Lines will
operate the stevedoring services in both terminals. Other companies will,
however, be free to use the port subject only to the proviso that Bell
Lines´ ships will have priority use of berthing facilities at the new
terminal. Whether other shipping companies will choose to use either of the
container terminals the Authority cannot say. The sizable increase in the
capacity of the port, however, may allow such competitors to enter the market.
If that were to occur it would actually result in increased competition.
is not the only Lo/Lo terminal through which goods can be shipped to and from
Britain and mainland Europe. Both Dublin and Cork harbours have Lo/Lo
terminals which can handle such traffic. In fact Dublin accounts for 54% of
total Lo/Lo traffic compared with 34% which goes through Waterford, with Cork
accounting for virtually all of the remainder.
addition, however, there is scope to switch from Lo/Lo to Ro/Ro and vice versa.
In many cases it is relatively easy to load a container onto a trailer to be
transported by road in order to avail of Ro/Ro transport facilities. Indeed
43% of container traffic currently travels to and from Waterford by road. In
addition to Dublin and Cork, Dun Laoghaire and Rosslare both have Ro/Ro
terminals. Waterford harbour´s share of the combined Lo/Lo and Ro/Ro
business is almost 19%.
Dun Laoghaire, Cork and Rosslare therefore all represent alternative outlets
though which exporters and importers can choose to route goods. Cork and
Rosslare in particular represent alternative ports for firms located in the
South of the country. Rosslare is only 49km from Waterford while Cork is 77km
also needs to be borne in mind that a sizable proportion of Ireland's external
trade is routed through Northern Ireland where it is shipped by either Lo/Lo or
Ro/Ro to Britain and the Continent. The Culliton Report noted that:
international Ro-Ro (roll-on roll-off) loads, one estimate is that almost 40
percent choose to go though Northern Ireland ports despite an extra road
journey of some 500km."
fact that up to 14% of Ireland's total external trade goes through ports in
Northern Ireland illustrates the extent to which ports in the State, including
Waterford, are exposed to competition from outside.
Authority does not consider that other forms of transport such as break bulk
offer a reasonable alternative to Lo/Lo and Ro/Ro modes. Similarly air freight
is not a substitute for such transport modes as the cost involved in carrying
heavy items by air is prohibitive. The high cost of developing a new Lo/Lo
terminal together with the difficulties involved in obtaining a suitable
location for such a facility excludes the possibility of new entrants to the
Authority nevertheless believes that there are a number of competing ports
through which goods may be shipped to and from Britain and mainland Europe by
Lo/Lo and Ro/Ro modes both within the State and in Northern Ireland. In its
opinion these ports should all be regarded as part of the market. Competition
takes place largely between the various ports which can handle Lo/Lo and Ro/Ro
notified agreement will not reduce competition between ports. As the Authority
believes that the market is that for shipping goods either by Lo/Lo or Ro/Ro
through ports in the entire island of Ireland, and that the notified agreement
does not prevent, restrict or distort competition in that market, the agreement
does not offend against Section 4(1) of the Competition Act. Indeed, as the
agreement only involves giving Bell Lines priority access rather than exclusive
use of the facilities, the development of the new terminal may allow other
shipping lines access to Waterford harbour for container traffic and could
Lines and Waterford Harbour Commissioners are undertakings within the meaning
of Section 3 of the Competition Act, 1991 and the notified arrangements
constitute an agreement which applies within the State.
Authority believes that the agreement does not prevent, restrict or distort
competition in the market for shipping goods to and from Britain and mainland
Europe by Lo/Lo and Ro/Ro modes and does not, therefore, offend against Section
4(1) of the Competition Act, 1991.
Competition Authority has issued the following certificate:
Competition Authority certifies that in its opinion, on the basis of the facts
in its possession, the agreement between Waterford Harbour Commissioners and
Bell Lines Ltd., (CA/11/92) giving Bell Lines priority use of the proposed new
container terminal in Waterford harbour, which was notified on 1 April 1992
under Section 7, does not offend against Section 4(1) of the Competition Act,1991.
the Competition Authority
[ ]1 Business
& Finance, 30 January 1992, Ireland's leading 1000 companies.
[ ]2 See,
for example, Sectoral Development Committee (1990), 'Report and Recommendations
on Port Costs', Dublin, Stationery Office.
[ ]3 TEU
- Twenty-Foot Equivalent Unit = 1,360 cubic feet.
[ ]4 Department
of Communications; 'Transport Policy: A Green Paper', Dublin, Stationary