27 July 2005

The Web

Ministry contends Sea Malta privatisation will not lessen competition

James Debono

Reacting to the news that the privatisation of Sea Malta has fallen under the scrutiny of the Office for Fair Trading the Ministry for Investments and Information Technology insisted that the privatisation would not bring about a 'lessening of competition'.
Last Sunday MaltaToday revealed that the Sea Malta’s privatisation process has fallen under the scrutiny of the Office of Fair Trading, the official watchdog which protects consumers from companies restricting competition.
The Director General of the Consumer and Competition Division, Marcel Pizzuto told MaltaToday that the Office of Fair Trading has held “preliminary meetings to give its advice on Sea Malta’s privatisation in respect to laws regulating the control of concentration.”
According to a spokesperson for the Ministry for Investments and Information Technology the Privatisation Unit has not been asked to participate in these preliminary meetings.
“It should be pointed out that the Fair Trading Commission is an independent Authority and nobody can interfere in its deliberations. It is entirely up to who it should ask to consult.”
According to the same Ministry the intervention of the Office for Fair Trade is “normal procedure.” He also told this newspaper that the Ministry cannot and does not wish to interfere in this process.”
The privatisation of Sea Malta has fallen under the scrutiny of the Office for Fair Trading because it could restrict competition in this sector.
Presently three companies are operating in the local shipping market. These are Grimaldi Naples, Grimaldi Genoa and Sea Malta.
If Sea Malta is privatised the Grimaldis will have effective control over the entire sector.
According to Marcel Pizzuto the office’s advice will be based on the Merger regulations found in the Competition Act.
According to sub regulation 4 of Cap.379 of the Competition Act, concentrations that might lead to a substantial lessening of competition in the Maltese market are prohibited.
A concentration is defined either as the merging of two or more undertakings previously independent of each other or as the acquisition of an undertakings by one or more persons already controlling at least one undertaking.
But the same act specifies that concentrations that bring about “gains in efficiency” that offset the effects of any “prevention or lessening of competition” are not prohibited.
Yet the company concerned will have to prove “that such gains cannot be otherwise attained, are verifiable and likely to be passed on to consumers in the form of lower prices, greater innovation, choice or quality of products of service.”
The Malta Financial and Business Times asked the Ministry whether it is envisaging any gains in efficiency which will be passed on to the consumer if Sea Malta is privatised.
The Ministry refrained from answering this question, insisting that Sea Malta already operates in a liberalised market.
“We do not believe that by privatising Sea Malta there will be a 'lessening of competition'. However, the competent authority will no doubt determine this.”


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