Port package III adopted – How the port service business is affected
- Jun 20, 2018
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European Council adopted the Regulation establishing a framework on market access to port services and financial transparency of ports, the so-called “port package III”. After expected signing in February, the act will be published in the Official Journal of the EU and will enter into force 20 days after notice. The new regulation will have material consequences.
The objective of the “port package III” is to establish a more efficient, interconnected and sustainable functioning of the trans-European transport network. The goal is to create a framework which improves the performance of all ports and helps them to cope with changes in transport and logistic requirements. There will be a liberalization of the provision of port services which has the potential to revolutionize current situation.
Scope and subject matter
The Regulation establishes a framework for access to the market of port services and common rules on the financial transparency and charges to be applied by managing bodies or provider of port services. The regulation shall apply to the provision of certain listed categories of port services, either inside the port area of seaports of the trans-European transport network or on the waterway access to and from these ports.
Access to the market of port services may be subject to:
- Minimum requirements for the provision of port services
- Limitations on the number of providers
- Public service obligations
- Restrictions related to internal operators
whereby Member States may decide not to impose any of these conditions. In addition, the term of access to the facilities, installations and equipment of the port shall be fair, reasonable and nondiscriminatory.
The managing body of the port may require providers of port services to comply with minimum requirements for the performance of the corresponding port service, such as:
- The professional qualifications and the financial capacity of the provider
- The availability of the relevant port service to all users
- Compliance with environmental requirements and labour law
- The good repute of the port service provider
Providers shall be treated in a transparent, objective, non-discriminatory and proportionate manner and the right to provide services on these minimum requirements shall be granted or refused by the managing body within a reasonable period. Any refusal shall be duly justified on the basis of these minimum requirements.
Limitations on the number of providers
Market access may be restricted as the managing body is entitled to limit the number of providers for a given port service for different reasons, especially due to the scarcity or reserved use of land or waterside space. Limitations may also apply to ensure safe, secure or environmentally sustainable port operations or if the characteristics of the port are such that the operations of multiple providers would not be possible.
The regulation defines obligations to publish any proposal to such limitations in order to give interested parties the opportunity to submit comments.
Where the managing body decides to limit the number of providers, it shall follow a selection procedure which shall be open to all interested parties, transparent and non-discriminatory. Details of this procedure will still have to be defined. As this is a highly competitive area, costly and lengthy court proceedings could be expected.
If the managing body provides port services itself as sole provider, the Member State concerned shall take such measures as are necessary to avoid conflict of interests. In any way, there is a huge potential for conflicts and claims and one could expect lengthy judicial procedures.
Public service obligations
Member States may decide to impose public service obligations related to port services on providers of port services and may entrust the right to impose such obligations to the managing body of the port under certain circumstances. Thus, Member States are able to ensure the provision of those port services of general interest that an operator, if it were considering its own commercial interest, would not assume.
The managing body of the port may decide to provide a port service itself as an internal operator.
Financial transparency and autonomy
In addition to the framework on market access, the regulation defines different obligations due to financial transparency and autonomy in order to ensure a level playing field and to avoid market distortions.
Transparency of financial relations
The regulation places various requirements on the transparency of financial relations between public authorities and a managing body of a port in receipt of public funds. These financial relations shall be reflected in a transparent way in the accounting system. This system must show the following:
- Public funds made available directly by public authorities
- Public funds made available through the intermediary of public undertakings or public financial institutions
- The use for which those public funds have been attributed
In addition to that, a managing body of a port in receipt of public funds which provides port services itself, is obliged to keep the accounts for that publicly funded port service separate from those for its other activities. In the event of a formal complaint and upon request, the managing body shall make these information available to the relevant authority.
Port service and infrastructure charges
The regulation states various requirements for the collection of charges. Charges for the services provided by an internal operator under a public service obligation shall be set in a transparent, objective and non-discriminatory way, and shall be proportionate to the cost of the service provided. In addition, Member States shall ensure that a port infrastructure charge is levied, which can be integrated into other payments, such as the payment of the port service charges.
The managing body of the port has to ensure that users of the port infrastructure are informed of any changes in the nature or level of the port infrastructure charges at least two months in advance of the date on which those changes come into effect.
- Providers of port services are obliged to ensure that employees receive the necessary e training to acquire the knowledge which is essential for their work.
- Member States have to ensure that an effective procedure to handle complaints is in place which is functionally independent of any managing body of the port or providers of port services.
- Interested parties shall have the right to appeal against the decisions by the managing body of the port.
- Member States shall lay down rules on penalties applicable to infringements of the regulation which must be effective, proportionate and dissuasive.
What to do now?
The new “port package III” will have material impacts on the day to day business of managing bodies of ports, port users, port service providers, cargo handlers and the competent authorities.
All Stakeholder should carefully examine the new obligations provided by the new regulation. As some of these obligations go hand in hand with increased administration effort, providers of port services should keep an eye of the changes at an early stage.
Special attention needs to be paid to licensing and selection procedures of providers of port services. Managing bodies and authorities are obliged to decide whether the number shall be limited and how selection procedure shall be administered.
Whether or not existing port service contracts have to comply with the “port package III” framework depends on the following:
- The regulation does not apply to port service contracts which were concluded before the date of adaption and are limited in time.
- However, port service contracts concluded before the date of adoption of the regulation which are not limited in time shall be amended in order to comply with the regulation by 1 July 2025.
The new Regulation brings up several new legal aspects and the practical approach to these challenges is not clarified yet. However, port authorities and managing bodies of ports will have to make sure that obligations of this liberalization process will be covered in compliance with the port package III from the beginning and cannot await further clarification by competent authorities and courts.