Shippers fear that the overturning of a guilty verdict for the Primorsky seaport for price fixing could set a precedent that makes it easier to overturn other high-profile price-fixing guilty verdicts for terminal operators.
Shippers fear that the ruling will allow terminal operators in Russia’s largest port of St. Petersburg that were recently found guilty of price fixing to go back to their old pricing structures, increasing the costs for handling a 20-foot container to $580 to $600 from $435 to $450.
The return of uncontrolled growth of tariffs at St. Petersburg would be devastating for Russian shippers and the transportation industry as a whole, said Alex Aronov, deputy director of logistics for Chinese and Turkish apparel distributor Kitaysky Tovary.
That view was echoed by Ivan Polyakov, head of Polyakov and Partners, a distributor of boards made from various materials, who said that the Federal Anti-Monopoly Service (FAS) should make sure to strengthen the evidence it uses in such cases so that it does not become discredited.
The Moscow Arbitration Court heard an appeal from the Primorsk Commercial Port (PCP) arguing that the guilty verdict of the FAS was unfounded because the price increases at the center of the case were driven by market trends and deregulation of the sector that began in 2013.
A lawyer for the PCP said during the appeal that because of the deregulation and the ability for shippers to use the port of Ust-Luga on the other side of the Gulf of Finland as an alternative, there was no basis for the price-fixing charges.
The FAS argued that the higher rates and increase in profitability at PCP, from 117 percent in 2013 to 263 percent in 2015, could not be justified because the terminal’s operating costs remained the same.
The judge hearing the case ruled that the competition from Ust-Luga was adequate and that as a result the higher rates could not be the result of price-fixing.
The appeals are the latest chapter in a saga that began last year after the FAS investigated a number of terminal operators for price fixing.
The FAS has levied fines totaling 17 billion rubles ($295 million) against the Novorossiysk Commercial Sea Port, Global Ports Holding, and Container Terminal St. Petersburg.
Shippers fear that if the fines are overturned, the recovery in Russian container volumes from recession and Western sanctions could be stymied. Container traffic at Russian ports rose 14.3 percent year over year from January to May, to 1.9 million TEU.
Imports rose 16.3 percent to 796,000 TEU and exports rose 13 percent to 781,000 TEU, and transshipment rose 16.3 percent to 23,200 TEUs.
Contact Eugene Gerden at firstname.lastname@example.org.