Rotterdam shipping deal faces tough conditions

Date: 08/07/1999

By Renée Cordes
Hutchison Port Holdings will have to relinquish some of its UK holdings to gain EU regulatory approval for its plans to buy a controlling stake in Rotterdam's largest shipping loading and unloading operation, according to EU officials and industry sources.

They predict that the European Commission will impose tough conditions on the deal, which would give Hutchison 50% of the shares in European Combined Terminals. The Rotterdam Port Authority would take 30%.

Acting Competition Commissioner Karel van Miert has until 20 August to deliver his verdict following an in-depth probe into the planned take-over. But he has already voiced concerns that Hutchison, a unit of Hong Kong-based Hutchison Whampoa, could acquire a stranglehold over northern European ports since it already has controlling stakes in UK container terminals for cargo shipments in Felixstowe and Thamesport.

The Commission's investigation is being watched closely by other container companies considering similar moves to stave off high investment costs - and by their customers, who fear escalating prices.

Shipping companies such as P&O Nedlloyd and Hapag Lloyd have formally complained to the Commission about the deal, arguing that it could create or strengthen a dominant position and raise prices for shipping loading and unloading services (known as stevedoring).

A spokeswoman for P&O Nedlloyd said that the agreement would give Hutchison control of about 43% of all containers handled in north-western Europe and that it would be "in a position to dictate pricing".

Local shippers are also concerned that Rotterdam authorities are buying a stake in the largest stevedoring company in the port for deep-sea vessels. "It would clearly limit the competitive position of other players," said Ferdinand Kranenburg, secretary of the Dutch Maritime Shippers' Council, whose 25,000 members account for 90% of the flow of goods to and from Dutch ports.

He added that shippers were particularly concerned that the deal would give Rotterdam the right to allocate stevedoring licences and might discriminate unfairly against competitors.

ECT is owned jointly by Dutch transport and tank storage groups International, Nedlloyd (which controls half of P&O Nedlloyd) and Pakhoed, each of which have just over 30% of the shares. The remainder are held by the Dutch state-owned railway company Nederlandse Spoorwagen.

Officials from the Rotterdam port and Hutchison denied that the deal would create or strengthen a dominant position, but declined to discuss whether they would make any concessions to win EU approval.

"We think there is enough competition in northern Europe, for example Hamburg and Zeebrugge, that it would not be possible for Hutchison to have a dominant position,' said Rob van Dyk, a spokesman for the Port of Rotterdam. "Every client who comes to us will be treated equally."

Rotterdam boasts Europe's largest container transport operation and is the world's fourth-largest container port.

Nearly three-quarters of the containers handled in Rotterdam are destined for other European countries and the container facilities are used by almost all big international container shipping lines.