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The Ferry Company of Læsø

26. november 2003

Journal nr.3/1120-0100-0745/MHA/ISA The Council meeting 26. November 2003

The Ferry Company of Læsø (FL) has filed a complaint regarding the prices the company is to be charged by Frederikshavn Harbour (FH).

Originally, FH demanded that the charges for harbour services were to rise from DKK 640,000 in 2002 to approximately DKK 1.6 m in 2007. After this change in prices, FL were to pay similar charges per gross tonnage, charges for goods and cars- and passenger charges as the two other shipping companies using the harbour, Stena Line and Color Line.

FL complains that the alteration following this original proposal constitutes an abuse of dominance in the form of similar terms (payment) for services of a differing value (admittance to the harbour), and in the form of excessive prices.

Up till now, FH’s calculation of the harbour charges was based on a fixed yearly indexed amount, set at a time when the harbour was still under state ownership. In the year 2001 the harbour became a municipality-owned autonomous harbour.

In its complaint, FL states that the company does not receive services of a similar economic value as the other shipping companies using the harbour do. These are specifically fender piles, length of quay, turn-outs for cars and depth of the basin, among other things. FL also states that they will be paying too much in harbour charges following the change in charges.

This is dismissed by FH which states that FL of historical reasons has paid an insufficient amount in harbour charges.

The parties of the case had negotiations in May and June of 2003. These negotiations led to a new offer from FH, dated the 3rd of June 2003. The new offer contained a prolonging of the alteration period to 8 years as well as FH offering to overtake the ownership and operation of the ramp from FL. The price of the ramp will be its depreciated value. In addition, the offer contained certain other matters including a yearly marketing subsidy between DKK 50,000 and DKK 100,000 (an average of DKK 75,000 ) until the year 2010. In a letter dated August 28th 2003, the offer was formally noticed as the new set of charges to be paid by FL. Therefore, the Competition Council has not considered the original offer.

The Competition Council is to determine whether the latest noticed increase in charges is consistent with article 11, paragraph 1 in the competition act.

The decision concludes that the relevant market is the market for harbour access with a capacity to receive ferries of FL’s type for ferry traffic of cars, passengers and cargo between Læsø and Jutland in a geographically limited area determined by a maximal transportation time of 2 hours to and from Læsø. The decision concludes that FH has a dominant position on this market.

Further, it is concluded that FH does not practice abuse of dominance in the form of price discrimination by applying similar terms for services of a differing value. It is concluded that the enforcement of the latest noticed charge increases will not imply an abuse of dominance in the form of unfair prices up until the year 2010.

When evaluating the enforcement of the latest noticed charge increase, the Competition Authority has weighted the three following criteria as a whole. The harbour’s profit, the harbour’s monopoly in relation to FL and a comparative study of the charges in other comparable harbours.

It is concluded that FH has a very high profit and that FL does not have economic alternatives to FH within a realistic period of time. It is concluded that the latest noticed harbour charges places FH among the most expensive of the compared harbours. Nonetheless the price level of several other harbours lie at the same level. Seen as a whole, the authority concludes that the enforcement of the latest noticed charges will not constitute an abuse of the harbours dominant position.

It is noted that the Competition Authority’s evaluation of the noticed charge increase has been conducted based on the current conditions. Should these change within the period until 2010, leading to a change in one of the criteria mentioned above, the Competition Authority reserves the right to evaluate the charges anew.