The Antimonopoly Committee of Ukraine (AMCU) protected the shipping agency market from abuses of the Ukrainian Sea Ports Authority (USPA)

August 30, 2019 · News

Upon the request by LEGRANT law firm in the interests of shipping agents the Antimonopoly Committee of Ukraine (AMCU) has obliged the Ukrainian Sea Ports Authority (USPA) to eliminate discrimination in concluding adhesion contracts with shipping agents.

It should be reminded that at the end of 2018, the Administration informed agents that henceforward the relations with it are to be based only on the grounds of the adhesion contract. And its absence had been making impossible both the cooperation with the USPA and the access to the shipping agency market.

In addition to the above, the terms of the document are specified by the state monopolist unilaterally without the possibility of the agent to offer its own terms at the stage of conclusion of the contract or propose amendments to the contract after its conclusion. Instead, the Administration has a right to amend the contract unilaterally at any time that is contrary to current legislation. Last December LEGRANT law firm applied to the Antimonopoly Committee in the interests of 6 shipping agents serving leading international container lines.

On the results of processing of the complaint, the AMCU issued to the Administration the binding recommendations as follows:

• to develop within 30 days non-discriminatory terms of the contract and ensure the transparent procedure for discussing these terms with shipping agents;

• to refrain from making amendments to the current adhesion contract during the developing of its new terms and not to restrict the access to the shipping agency services market for companies that have not filed a declaration of adhesion;

• to ensure the shipping agents’ right to make the choice of necessary services at free rates under separate contracts.

Also, the USPA submitted for the Committee’s consideration a number of terms to confirm the reliability of the agents, including the transfer of "insurance" funds in the amount of 35 000 USD to the account of the Administration and guarantee of the established number of the ship entries. The Committee in detail considered the proposal and concluded that the inclusion of such clauses to the contract could lead to contraventions of the legislation on protection of economic competition.

"The recommendations of Antimonopoly Committee offset absolutely unlawful terms that the USPA tried to impose to shipping agents. Beginning from the unreasonable exclusion of shipping agents from the procedure of consideration of the terms of adhesion contract, the empowering of the USPA by the right to amend such a contract unilaterally, and finishing by so-called "reliability criteria" of shipping agents.

For example, the requirement to transfer the security deposit means that the agent must either manage the shipowner's funds arbitrarily or bear the burden of the shipowner's financial expenses on its own, which contradicts the nature of the agency relationship. Not to mention that a shipping agent registered in Ukraine has to transfer funds in USD to the resident state enterprise violating currency legislation.

The AMCU's recommendations have to become a clear signal to state monopolists in other transport markets that are currently trying to implement such discriminatory terms through adhesion contracts", - Tatiana Titarenko, the Managing Partner of LEGRANT, commented the recommendations issued by the AMCU.

"We are grateful that the AMCU did not stand aside and did not allow the Administration to ignore the provisions of law by regulating the shipping agency market arbitrarily through an enforced adhesion contract. This is a good signal for foreign shipowners.

I hope that the Administration will not delay with the proper implementation of the recommendations and finally return to a parity dialogue with market members", - said Oleksandr Shchokin, the President of the Association of Container Lines of Ukraine.

The case was supported by LEGRANT Senior lawyer Lyudmila Sizonenko and Managing Partner Tatiana Titarenko.