Insidious move to undermine anti-monopoly? CA issues notices on Ocean Network Express and others

By S.S. Selvanayagam

The Court of Appeal issued five notices on Ocean Network Express (O.N.E) and alleged partners on trade monopolisation and others returnable for 19 March.

The bench comprised justices P. Padman Surasena (CA President) and Shiran Gooneratne.

Parliamentarian Vasudeva Nanayakkara filed a writ petition citing the Director General of Merchant Shipping, Ports and Shipping Minister Mahinda Samarasinghe, Minister of Finance and Mass Media, Hayleys Advants Ltd, McLarens Investments Ltd, Ocean Network Express (O.N.E) Lanka Ltd. and UMI Shipping Ltd. as respondents.

Faisz Musthapha PC with Faiza Markar, Akeel Deen and Rajika Aluvihare instructed by B.S.U. Fernando appeared for the petitioner.

The petitioner in his public interest litigation alleges that Hayleys Advants or McLarens are allegedly monopolising or carrying out restrictive practices in the Sri Lankan shipping industry.

He states that Hayleys Advants Ltd. has acquired 94.81% equity of Sri Lanka Shipping Company Ltd. for a purchase of about Rs. 4.9 billion.

He impugns the acquisition is in line with Hayleys Plc’s group strategy of expanding its maritime operations and paving the way for the establishment of the largest marine and shipping company in Sri Lanka.

He says Hayleys Advants Ltd. is said to control 70 % of Sri Lanka’ shipping and maritime services market and laments it is seeking to acquire more acquisitions in the shipping sector with a view to increase its market share in the future.

He states that all those principals operate in Sri Lanka through companies incorporated to carry out their operations in collaboration with their respective agents.

Hayleys Advants Ltd. and McLarens Investments Ltd. are monopolising, combining or conspiring with others to monopolise the shipping industry of Sri Lanka, he alleges, the restrictive practices are openly and deliberately being carried out in relation to such an industry.

Restrictive practices and monopolisation cause inefficient allocation, social and economic disparity, provision of inferior services, elimination of competition, dominant entities, prevention of new entrants and considerable political influence to scuttle political and regulatory process, he elaborates.

The Government, having recognised the fact, declared to the public that it would implement reforms to open up the shipping industry to competition, he states.

The Minister of Finance has ensured that competition within the industry will be fair and balanced, with unfair trading practices being eliminated through the enactment of prudent regulation, he points out.

He states that Ocean Network Express (O.N.E) Lanka Ltd. had on 30 November 2017 been incorporated as a private company and the objective of the incorporation had been to carry on in Sri Lanka the business of marketing, promotion and agency activities pertaining to the liner shipping business of O.N.E which is a major new global container shipping company, emerging as a joint venture between three Japanese companies.

The regulations under the Licensing of Shipping Agents Act requires not less than 60% of the issued shares be held by a Sri Lankan citizen to be eligible for a licence to carry on business as a shipping agent, he underlines.

As such, 60% of the shares of Network Express (O.N.E) Lanka Ltd. are held by UMI Shipping Ltd. and accordingly UMI Shipping Ltd. is the majority shareholder of Network Express (O.N.E) Lanka Ltd. whereas with UMI Shipping Ltd, the entirety of the shares are held by just Hayleys Advants Ltd. and McLarens Investments Ltd, he elucidates.

He spells out that it is evident that Hayleys Advants Ltd. and McLarens Investments Ltd. are continuing to monopolise the shipping industry of Sri Lanka through UMI Shipping Ltd, and thereby Network Express (O.N.E) Lanka Ltd.

He reiterates that in spite of the Government introducing reforms to open up the shipping industry to competition, the most dominant shipping companies are continuing through various means to monopolise the industry and engage in restrictive practices.

He claims he received credible information that Network Express (O.N.E) Lanka Ltd. has made an application to the Director General of Merchant Shipping for a licence to carry on business in Sri Lanka as a shipping agent.

He says he has called upon the Director General of Merchant Shipping to refrain from issuing a shipping licence to any newly-incorporated shipping company unless and until the Government’s regulations against the monopolisation and restrictive practices affecting the shipping industry are declared and until the final determination of a similar writ petition pending in the Court of Appeal.

He is seeking an order from the court to restrain the Director General of Merchant Shipping from entertaining the application of Network Express (O.N.E) and an Interim Order as well.