2003年-世界发展银行全球_Market_Power___Ports_-_A_Case_Study_of_Post-Privatization_Mergers_4页_325kb

Summary: Market Power in the Port Sector – A Case Study of Postprivatization Mergers

Core Content

This document explores the challenges and considerations faced by regulators in managing mergers in the port sector following privatization, with a focus on the case of Puerto Nuevo in Argentina. It discusses both vertical and horizontal mergers and their implications for competition and market power.

Main Points

1. Background of Puerto Nuevo's Privatization

• Argentina restructured and privatized its port system in the early 1990s, transferring control to provincial governments.
• The Port of Buenos Aires was split into two: Dock Sud (province-controlled) and Puerto Nuevo (national jurisdiction).
• In 1994, Puerto Nuevo's six terminals were opened for private sector bids under long-term concessions (18–25 years).

2. Regulatory Framework and Mergers

• The regulatory framework did not impose constraints on vertical integration, allowing firms like P&O to integrate terminal operations with maritime shipping.
• The government initially prohibited horizontal mergers between terminals but later issued resolutions allowing them, although implementation was suspended pending judicial review.
• The Antitrust Commission was tasked with evaluating merger proposals, using a cost-benefit analysis to balance competition and efficiency.

3. Performance and Market Dynamics

• After privatization, productivity in Puerto Nuevo increased significantly, with terminal handling prices dropping from $450 to $220 per container by 2001.
• However, container traffic declined by 44% between 1998 and 2002 due to economic recession and currency devaluation.
• Port operations are characterized by high fixed costs and low marginal costs, leading to price competition when there is excess capacity.

4. Vertical Mergers

• In 2001, the Antitrust Commission approved Maersk’s acquisition of terminal 4.
• Key competition concerns in vertical mergers include market foreclosure and price discrimination.
• The Commission concluded that Maersk could not foreclose the market due to limited terminal share (8%) and the presence of alternative ports.
• Price caps were in place, but terminals often offered discounts, making price discrimination less impactful.
• However, non-price discrimination (e.g., longer waiting times, poor service quality) could still harm competition if not monitored.

5. Horizontal Mergers

• In 2000, terminals 1, 2, and 3 proposed a horizontal merger, which was initially prohibited.
• The Antitrust Commission emphasized the need to assess market concentration, barriers to entry, and excess capacity when evaluating horizontal mergers.
• Barriers to entry are crucial in determining the impact of mergers on competition. In Puerto Nuevo, actual and potential competitors (e.g., Dock Sud Port, Zárate Port) exist, which limits the ability of merging firms to raise prices.
• Excess capacity can either increase or reduce competition, depending on how firms behave. Antitrust agencies must evaluate competitive history and market dynamics.
• Market intensity is also a factor, as the loss of an innovative competitor could reduce price competition.

6. Efficiency Gains and Antitrust Considerations

• Mergers may lead to efficiency gains, such as economies of scale and better access to capital markets.
• Antitrust agencies must ensure that efficiency benefits outweigh competition risks, as demonstrated in the case of Puerto Nuevo.
• The Antitrust Commission must assess whether the merger improves economic efficiency and consumer welfare.

7. Potential Benefits and Risks

• Benefits of allowing mergers include rationalizing resources and increasing efficiency.
• Risks include price coordination, loss of competitive dynamics, and reduced transparency.
• Allowing mergers may also damage the government's reputation by signaling that competition rules can be changed.

8. Conclusion

• The case of Puerto Nuevo highlights the complexity of regulating mergers in the port sector.
• While privatization improved service quality and reduced trade costs, the dynamic nature of the maritime transport market requires flexible regulatory approaches.
• Regulators in other countries should consider similar methodologies when evaluating merger proposals.
• In Argentina, the port regulator should be granted greater powers, particularly in information gathering, to ensure open access and maintain competition.

Key Information

• Puerto Nuevo accounts for over 90% of Argentina’s container traffic.
• Productivity improvements post-privatization were significant, with a drop in terminal handling prices.
• Vertical integration can lead to efficiency gains but must be evaluated for potential anticompetitive behavior.
• Horizontal mergers require careful analysis of market structure and entry barriers.
• Excess capacity and strategic bidding are important factors in assessing merger impacts.
• The Antitrust Commission plays a central role in evaluating market power and competition.

References

• Briggs, María Cristina, Diego Petrecolla, and Verónica Vallés. 2001. Efectos de la Regulación en las Condiciones de Competencia de Puerto Nuevo de Buenos Aires.
• US Department of Justice and US Federal Trade Commission. 1997. Horizontal Merger Guidelines.

Viewpoint

• This document is an open forum for sharing policy innovations related to privatization and market-based solutions.
• The views and conclusions are those of the authors, not necessarily those of the World Bank or its affiliated organizations.