After a nearly two month investigation starting from mid-April 2017, the NDRC decided to enjoin 39 Chinese Ports, especially Shanghai and Tianjin Ports, to change their pricing behavior.

According to the press conference held in mid-November 2017, each of those ports has a strong market power within certain geographical perimeter, since it is economically rational for enterprises located in their respective area to go to the nearest port. Thus, there is a rather weak competition between different ports.

The NDRC found three major anticompetitive conducts of those ports.

First, the ports force ship owning companies to use complementary services such as tugboat, tallying, shipping agent operated by its own affiliates.

Second, as container operators, the ports charged excessively high prices for local container loading services, while charging much less than international transfer container services, even though the cost of the latter is more considerable than that of the former. It is because international container transfer market is a relatively competitive market, in comparison, the local container facilities are rather irreplaceable for local companies due to the limited geographical perimeter of their commercial activities. Thus, ports find a way to charge higher prices for such a non competitive market.

Third, the ports abuse their dominant position to impose unfair commercial conditions on shippers such as tying stuffing/tallying service to container release, loyalty clauses/non competition clause or most favorable nation clause etc.

The NDRC found that these conducts have anticompetitive effects, leading to higher charge for business owners, higher entry barrier for competitors on relevant markets, and less cost reducing/innovation incentives for the ports.

It thus enjoins these ports to carry out self inspection in order to open relevant markets (such as tallying, tugging, shipping agent markets), lower container loading/unloading fare by 10% to 20%, and eliminate unfair commercial clauses imposed to different business partners.

The measures are a positive move of the administration to lower avoidable transportation costs for import/export business owners, to ensure that competition in some port related markets is not hampered by anticompetitive means. It is also a chance for the ports to think of merit-based ways to improve their competitiveness, such as lowering costs, improving service qualities and innovating their business activities.