Port Competition Regulation: A Tool for Monitoring for Anti-Competitive Behaviour

Abstract

Experience and research strongly suggest that privatisation has been effective for enhancing efficiencies and lowering costs, provided there is a competitive environment. While governments for the most part have avoided transfers of public sector monopolies to private ones, the result in the port sector has still tended towards highly concentrated markets, as determined by any one of a number of market tests. Fierce competition may exist in such markets, but ports in these circumstances may also be more susceptible to anticompetitive behaviour. Regulators today rely on concentration ratios to measure the extent of firm dominance. These ratios, however, only focus on market structure, and are not indicative of market performance (eg the extent to which conditions may exist for anticompetitive behaviour). This article first reviews the typical ‘tests’ used by countries to determine the extent of market concentration and then presents a model for monitoring the conditions in which anticompetitive behaviour is likely to occur. A test application of the model is demonstrated that can facilitate the regulator’s need to monitor for anticompetitive behaviour.