CCI calls for review of Part X

THE Chamber of Commerce and Industry has called for an urgent review of Part X of the Trade Practices Act 1974 in a bid to protect importers from additional charges imposed by some ship    owners.

The move follows an announcement by the Australian Competition and Consumer Commission (ACCC) that it would investigate a series of price increases by companies carrying cargo by ship from North-East Asia to Australia after complaints by freight forwarders and importers.

These companies operate in accordance with the Asia Australia Discussion Agreement (AADA).

There is evidence that some ship owners had formed discussion groups and were exploiting Part X of the Trade Practices Act 1974 to increase margins by applying excessive surcharges.

Also at stake is the ability of importers and exporters to negotiate satisfactory freight contracts with shipping lines that are members of discussion groups.

Part X of the Trade Practices Act provides a standard for exporters with respect to ‘blue water’ freight rates, however no such protection applies for importers.

Part X also allows international cargo liner operators an exemption from some laws that prohibit anti-competitive conduct.

CCI trade services director Keith Seed said there had been a spate of increases in recent months whereby shipping lines that were members of discussion groups had used additional charges and surcharges as a means of lifting their margins rather than negotiating ‘blue water’ rates.

Importers had been hardest hit by such charges and were powerless to prevent these charges escalating without government intervention, Mr Seed said.

It was evident there was collusion by some ship owners to exploit the Trade Practices legislation by relying on surcharges “as a method of income under the guise of non-blue water components”, he said.

“At one point, there was a 100 per cent increase in surcharges in a three-month period,” Mr Seed said.

“Freight rates have been reasonable for quite some time, but the uncertainty that these additional charges put onto shippers is of concern.”

CCI has written to Federal Transport Minister John Anderson calling for a review of Part X of the Trade Practices Act 1974 to be brought forward to 2004. It is scheduled for review in 2005.

The CCI letter says that importers remain entirely in the hands of ship owners and are powerless to prevent the escalation of charges.

“In addition, there is collusion by ship owners in exploiting the legislation by relying on surcharges as a method of increasing total freight charges under the guise of non ‘blue-water’ components,” the letter says.

Mr Seed said CCIWA had recently attended a meeting in Melbourne with representatives of the Government and the Australian Peak Shippers Association to discuss the matter.

The ACCC was also in attendance as an observer.

The investigation launched by the ACCC with regards to the AADA is in response to complaints received from importers, freight forwarders and business associations. The ACCC has said it will conduct its investigation publicly so that all interested parties, including the AADA, will have the opportunity to respond.

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