The European Parliament recently voted in favour of a draft piece of legislation intended to establish a European-wide framework on market access to port services and financial transparency of ports.
Obtaining the approval of the Parliament has been an achievement in itself, given that two sets of proposals by the European Commission relating to access to ports and transparency of port changed were rejected by it in 2003 andin 2006.
In 2014, the Commission came up with a new watered-down proposal that has now been approved by the European Parliament and further discussions on this proposal are still under way.
Transport is a competence shared between the EU and member states. A market exercise in port services across European countries shows that this sector is still characterised by monopolies and exclusive rights in a large number of European member states.
Port services include mainly pilotage, towage and cargo-handling. Restrictions in port services come in different guises, such as closed-door agreements and concessions awarded on other than objective reasons.
The Commission’s stated intention behind its proposed legislation is to strengthen market access for port services to encourage competition, ensure financial transparency and improve port coordination.
The Commission intends to tackle operating conditions that prevent new entrants to the market and establish transparent procedures for hiring service providers, in a bid to guarantee the freedom of provision of services in European ports. Providers of port services will have access to essential port facilities in order for them to carry out their activities, a necessary corollary to the freedom to provide services.
Yet member states, through the managing bodies of ports, may impose minimum requirements on providers of specific port services as long as these consist of objective and proportionate criteria such as professional qualifications, safety and security specifications, necessary equipment and environmental requirements.
When such requirements relate to specific local knowledge or acquaintance with local norms, the managing body of the port is required to ensure that adequate access to training exists for new market entrants. Requirements that are not objective or disproportionate will be considered as an implicit introduction of market barriers.
This sector is still characterised by monopolies and exclusive rights in a large number of European member states
Outside the scope of the market, access provisions are cargo-handling and passenger services. The Commission justified the exclusion of these two sectors by maintaining that market access for providers of cargo-handling and terminal passenger services are granted, in many ports, through public concession contracts in relation to which future legislation will be implemented.
The proposed regulation allows room for permissible restrictions in the number of providers of a port service. Restrictions dictated by scarcity of land justifying a limit on the number of active operators in the port perimeter will be allowed, provided these constraints are documented in a port development plan. Restrictions are also allowed in the case of operators on which a public service obligation is imposed. The proposed legislation necessitates a transparent selection process in the event that port service providers will be limited in number.
The new rules aim to guarantee financial transparency in port operations. Port authorities are regulated in the port financing chapter of the proposed regulation.
Decisions of the Court of Justice of the European Union on state aid have established that port authorities, regardless of their ownership, are undertakings engaged in economic activities given that these charge port dues, concession fees or service charges.
The proposed regulation requires port-managing bodies that receive public funds to evidence the effective and appropriate use of state funding. Although the port authorities will not be required to publish detailed accounts, they will need to be able to provide this information to the national and EU monitoring authorities when required. Managing bodies will be granted the freedom to levy infrastructure charges.
Port service charges levied by service providers that have not been subjected to an open public tendering process must be set according to normal market conditions, in such a way that the total charges do not exceed the total incurred costs and a reasonable profit.
The proposed legislation requires the setting up of a port users’ advisory committee in each port, which will bring together representatives of operators of vessels, cargo owners and other port users.
Under the proposed rules, the committee will have to be consulted on the level and structure of the charges imposed.
Lastly, the Commission in its proposed draft requires member states to set up an independent supervisory body that monitors and supervises the application of the new rules. The intention is that these independent bodies will share information about their work and decision-making principles and cooperate closely for the purpose of mutual assistance in their tasks.
jgrech@demarcoassociates.com
Josette Grech is adviser on EU law at Guido de Marco & Associates.