Associations defend the model suggested by Antaq to “reduce oligopoly and increase competition and efficiency” in the Port of Santos
The Brazilian productive sector expressed support for the two-phase auction model proposed by (National Waterway Transport Agency) to the STS-10 terminal (Tecon Santos 10), in the Port of Santos (SP), the largest in Latin America.
The model prevents companies that already operate terminals in the Port of Santos from offering proposals in the 1st phase. For them, it would only be possible to participate in a 2nd phase if companies that do not yet operate in the region do not present valid proposals in the initial stage.
In a note, the (Brazilian Food Industry Association), (Brazilian Association of the Soft Drinks and Non-Alcoholic Beverages Industry) and the (Brazilian Institute of Competition Ethics), who represent users of the port sector, argue that the measure is essential to reduce market concentration and increase logistics competitiveness in the country. Here’s the do document (PDF – 86 KB).
“We give unconditional support to the two-phase auction model proposed by Antaq for STS-10. Echoing […] emphatically against the perpetuation of a concentration that dominates 100% of the container capacity at the Port of Santos”they say.
According to the associations, this extreme concentration constitutes an oligopoly, limiting options for importers and exporters and increasing costs for the entire Brazilian economy.
They state that the two-phase auction model was approved by Antaq and supported by the Ministry of Ports and Airports, being identified by jurists and economists as legally safe and technically adequate.
“The two-phase model is the only effective solution to guarantee the entry of a new operator and encourage real competition in the market. The efficiency of our foreign trade and national competitiveness in a strategic market for the entire production sector are at stake”they say.
For associations, the entry of a new operator guarantees “real competition”unlike alternatives such as the divestment of incumbents, which do not have specific regulations and can generate legal uncertainty.
It’s up to (Federal Audit Court) decide whether or not the commercial restriction is valid.
DIVISION AT TCU
The case over STS-10 divided the Court. The rapporteur, minister, proposed a single-stage auction with subsequent disinvestment for incumbents who win the contest. The model follows and gives .
In her vote, Anastasia argued that the restriction has no technical support, as it prevents competition from the beginning without demonstrating that such a measure would bring concrete benefits to competition. Here is it (PDF – 762 kB).
According to him, an incumbent that previously agrees to dispose of its assets before signing the contract becomes, from an economic and competitive point of view, equivalent to a new entrant, having aligned incentives to operate Tecon 10 and without the capacity for additional concentration in the market.
The minister, reviewer of the process, disagreed with the rapporteur and defended the two-phase auction model proposed by Antaq, stating that the restriction on incumbents is an indispensable structural remedy to correct the two market failures of the Port of Santos: the high horizontal concentration and the verticalization of terminals by large shipowners.
Dantas classified it as “naive” the single-stage proposal with subsequent divestment, defended by the rapporteur, saying that this model tends to fail because it also allows for judicialization, delays investments and symbolic sales that do not create a real competitor. Here is Dantas’ vote (PDF – 455 kB).
TCU is due on December 8th.
IMPORTANCE OF THE PROJECT
Tecon 10 is considered strategic to avoid logistical bottlenecks. Studies by Antaq indicate that container terminals in Santos could be open until 2028.
The terminal is on the right bank of the Port of Santos, in the Saboó region. The area designated for the project is around 622 thousand square meters and will have a pier approximately 1.3 kilometers long, according to information from Antaq and .
With a projected capacity to handle up to 3.5 million TEUs per year (20-foot container equivalent unit), the STS-10 owes total containers to the Port of Santos.
