SECTOR INQUIRY ON DOMESTIC SEAPORTS Portuguese Competition Authority 11 June 2015 26

Outline Description of the logistic chain and its players Economic relevance of seaports Main conclusions on the sector PCA’s recommendations - structure PCA’s recommendations in detail 15

Description of the logistic chain and its players Origin of the goods Inland transport to the harbour Port services Maritime transport Inland transport to the destination Destination of the goods 15

Economic Relevance of Seaports Means of transport used in Portuguese exports (2013) Ports in Portugal (mainland) Source: IEVA, Final Report, 2014. Source: Statistics Portugal 15

Main conclusions – 1/4 High concentration levels Concentration indexes for Port Terminals Services per Type of Cargo TYPE OF CARGO C1 C2 Containerised 49% 97% Liquid bulk 77% >77% Dry bulk 56% 67% Break bulk 41% 15

Main Conclusions – 2/4 Port terminal concessions and entry barriers Time-limit for current port terminals concessions 15

Main conclusions – 3/4 PCA’s questionnaire results to port users 15

Main conclusions – 4/4 Summary High concentration levels; High barriers to entry (concessions, legislation, port authorities); Low satisfaction from port users (specially with price/value for money) Capacity constrains; Specialization and differentiation in the services provided by port terminals; Vertical integration of the main players; In general, shippers and port services’ users do not have significant countervailing buyer power

PCA’s Recommendations - Structure Portuguese State Sector regulator Governance Model Cost Transmission along the value chain (Pass-Through) Port Administration Concessions model Port terminal operators Other port services Port administration tariff scheme Ship owners Access to the port services markets Shippers 15

PCA’s Recommendations in detail Main Competitive Constraints Main Preliminary Recommendations Governance model of the ports system A clear separation of regulatory activity, port management and comercial activities: AMT should be effectively implemented. Main objectives of port authorities: promote the use of port infrastructures, the performance of port services and the value for end users, including the reduction of tariff and fees Access conditions to terminal concessions Adopt the rules and principles laid down in the EU Directive on Concessions (Directive 2014/23/EU) Access conditions to port services Liberalisation of market access to port services Tariff scheme adopted by port authorities Reduce fees charged by port authorities on concessions Reduce the variable component of the two-part tariff charged by port authorities Pass-through of cost savings in the supply chain to port end-users Promote the pass-through of any cost savings upstream – including the reduction of fees charged by port authorities – to end users, through a renegotiation of existing ports concessions and the implementation of concession contracts with clear performance-based incentives and performance measurement schemes 15

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