“PROVISIONAL MEASURE” OF PORTS – CARTEL CREATION?

“PROVISIONAL MEASURE” OF PORTS – CARTEL CREATION?

 Companies of the port sector are concerned about the effects of “provisional measure” 595. On the company´s evaluation, the new law will not decrease the shipping cost and can even create a cartel in the country.

 The sector flags the possibility of very few international freight companies become the owners of ports in Brazil and join to “break” competitors.

 Currently, the international freight market is formed by a few companies based in free fiscal locations as Bermuda.

 In fact what these companies end up doing is tying freight with the port service and as a consequence charges more the customer than they should.

 However, a resolution of the “National Agency for Waterway Transportation” (ANTAQ) dated of February 2012, states that the fee paid to the port should be charged as compensation by the ship owner.

The biggest concern is that these companies come to Brazil and build their own ports. If it occurs the following could happen: (i) price be stipulated; (ii) “dumping”; and (iii) competitors “breaking” . Afterwards, they would control freight rates, increasing the cost of these services.

 The companies claim that the “provisional measure” 595 prohibits international ship owners to purchase ports and that should be inspected by the agency (ANTAQ) in a more effective way the money transfer of  port charges.

NOTE: In the Brazilian Constitutional Law, provisional measure (“Medida Provisória”) is an act of the President (Chief of Executive), with the force of law, without the participation of the Legislature, which will only be called to discuss it and approve it at a later date. The assumption of the provisional measure is urgency and relevance, cumulatively.