Alleged bid for shipping monopoly: CA fixes argument for Dec. 4

By S.S. Selvanayagam

The Court of Appeal fixed the argument for December 4, 2018, in respect of the writ petition filed by Parliamentarian Vasudeva Nanayakkara, on the alleged shipping monopoly in the country.

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

The Court of Appeal on February 5 sent notice on Ocean Network Express (O.N.E) and the alleged partners on trade monopolization and others. Petitioner Nanayakkara in his petition cited Merchant Shipping director general, Ports and Shipping Minister Mahinda Samarasinghe, Finance and Mass Media Minister Mangala Samaraweera, Hayleys Advantis Ltd, McLarens Investments (Pvt.) Ltd, Ocean Network Express (O.N.E) Lanka (Pvt.) Ltd and UMI Shipping (Pvt.) Ltd as respondents. 

Faisz Musthapha PC with Faiza Markar, Akeel Deen and Rajika Aluvihare, instructed by B.S.U. Fernando, appeared for the petitioner. Romesh de Silva PC appeared for UMI Shipping (Pvt.) Ltd. Ali Sabry PC appeared for Hayleys Advantis Ltd. Sanjeeva Jayawardane PC appeared for McLarens Investments (Pvt.) Ltd.
The petitioner in his public interest litigation alleges that Hayleys Advantis and/or McLarens are allegedly monopolizing and/or carrying out restrictive practices in the Sri Lankan shipping industry.

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

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

He says Hayleys Advantis Ltd is said to control 70 percent of Sri Lanka’s 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. 

Nanayakkara alleges that Hayleys Advantis Ltd and McLarens Investments (Pvt.) Ltd are monopolizing and/or combining and/or conspiring with others to monopolize the shipping industry of Sri Lanka and notes that the restrictive practices are openly and deliberately being carried out in relation to such industry.

Restrictive practices and monopolization 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 recognized the fact, declared to the public it would implement reforms to open up the shipping industry to competition, he states.

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

Nanayakkara states that Ocean Network Express (O.N.E) Lanka (Pvt.) Ltd was incorporated as a private company on November 30, 2017 and the objective of the incorporation has been to carry on in Sri Lanka business of marketing, promotion and agency activities pertaining to the liner shipping business.

The company emerges as a joint venture between three Japanese companies, he says.

The regulations under the Licensing of Shipping Agents Act require not less than 60 percent 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 percent of the shares of Ocean Network Express (O.N.E) Lanka (Pvt.) Ltd are held by UMI Shipping (Pvt.) Ltd and accordingly, UMI Shipping (Pvt.) Ltd is the majority shareholder of Ocean Network Express (O.N.E) Lanka (Pvt.) Ltd.

Nanayakkara says that the entirety of the shares of UMI Shipping (Pvt.) Ltd is held by Hayleys Advantis Ltd and McLarens Investments (Pvt.) Ltd.

He states it is evident that Hayleys Advantis Ltd and McLarens Investments (Pvt.) Ltd are continuing to monopolize the shipping industry of Sri Lanka through  UMI Shipping (Pvt.) Ltd and thereby, Ocean Network Express (O.N.E) Lanka (Pvt.) Ltd.

He reiterates that in spite of the government’s attempt to introduce reforms to open up the shipping industry to competition, the most dominant shipping companies are continuing through various means to monopolize the industry and engage in restrictive practices.

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

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

He is seeking an order from the court to Merchant Shipping restraining its director general from entertaining the application of Ocean Network Express (O.N.E) and an interim order as well.