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Anti-competitive regulation on Copenhagen Free Port

22. juni 2005

3/1102-0400-0079/ISA/HLA The Council meeting 22 June 2005

The regulation on Copenhagen Free Port has been analysed on several occasions, both by the Competition Authority itself and together with other ministries as part of the Governments project on anti-competitive regulation.

On this background, the Competition Authority has now initiated an analysis on the competitive affects of Copenhagen Malmö Port’s (CMP’s) exclusive right to offer harbour services in Copenhagen free port. The Competition Authority has also analysed the effects of Copenhagen Port’s and CMP’s exemption for tax on real estate.

The exclusive right and the exemption for tax is a direct or necessary consequence of the regulation in sections 3 and 7 in the Act on Copenhagen Free Port. Conse-quently, it is not possible to apply the Competition Act’s provisions on anti-competitiove agreements and abuse of dominant position.

Section 3 of the Act on Copenhagen Free Port contains an exclusive right for CMP to perform several types of harbour services in Copenhagen Free Port. CMP does thus have a legal monopoly, which impedes other companies from offering these types of services in the Free Port area.

The analysis shows that the exclusive right affects other competitors’ possibilities for offering harbour services, especially concerning container handling and services for cruise liners. The exclusive right in section 3 of the Act on Copenhagen Free Port is thus particularly damaging for competition in these markets.

Furthermore, the analysis shows that lack of competitive pressure following from the exclusive right in section 3 of the Act causes inefficiency and high prices to the detriment of the users of the harbour.

The exclusivity in section 3 of the Act is not necessary to uphold the special customs regulation in the free port. These matters are fully regulated in the existing rues on costumes and taxes. Preservation of the customs regulation in the free port should thus not be used to justify the exclusive right in section 3 of the Act.

Furthermore, in section 7, the Act on Copenhagen Free Port contains an exemption for taxes of any kind on real estate in the Free Port area.

Copenhagen Port is obliged by law to finance the building and maintenance of in-frastructure in the Free Port. Still, the analysis shows that the tax exemption gives Copenhagen Port an extraordinary additional earning on tenancy. The Council finds that the tax exemption distorts competition on the market for commercial ten-ancy. The Council also finds that the tax exemption gives Copenhagen Port a dis-proportionate advantage compared to other commercial ports.

The Competition Council has thus recommended to the Minister of Transport and Energy that sections 3 and 7 in the Act on Copenhagen Free Port are repealed.