Vasu files another case against shipping industry monopolisation

• Seeks order to restrain Director General of Merchant Shipping from entertaining Network Express’ application 

By S.S.Selvanayagam

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

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

Parliamentarian Vasudeva Nanayakkara, the whistle-blower in this case, filed Writ petition citing Director General of Merchant Shipping, Ports & Shipping Minister, Finance & Mass Media Minister, Hayleys Advants 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.

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

He states that the Hayleys Advants Ltd. has acquired 94.81percent 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 groups 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 Advants Ltd. is said to control 70 percent of Sri Lanka’s hipping 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 all those principals operate in Sri Lanka through companies incorporated to carry out their operations in collaboration with their respective agents.

He alleges that Hayleys Advants Ltd. and McLarens Investments (Pvt) Ltd. are monopolising and/or combining and/or conspiring with others to monopolise the shipping industry of Sri Lanka and the restrictive practices are openly and deliberately being carried out in relation to such industry.
Restrictive practices and monopolisation causes 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 that it will implement reforms to open up the shipping industry to competition, he states.

The Finance Ministry 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.

He states that Ocean Network Express (O.N.E) Lanka (Pvt) Ltd has been incorporated on 30.11.2017 as a private company and the objective of the incorporation has been to carry on Sri Lanka 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, emerges a joint venture between three Japanese companies. The regulations under the Licensing of Shipping Agents Act require not less than 60 percent of the issued shares be held by Sri Lankan Citizen to eligible for a license to carry on business as a shipping agent, he underlines.

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

He spells out it is evident that Hayleys Advantis Ltd. and McLarens Investments (Pvt) Ltd. are continuing to monopolise the shipping industry of Sri Lanka through UMI Shipping (Pvt) Ltd and thereby Network Express (O.N.E) Lanka (Pvt) Ltd. He reiterates in spite the government’s intention to introduce 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 the Network Express (O.N.E) Lanka (Pvt) Ltd has made an application to the Director General of Merchant Shipping for a license 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 license to any newly incorporated shipping company until the government’s regulations against the monopolisation and restrictive practices affecting 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 restrain the Director General of Merchant Shipping from entertaining the application of Network Express (O.N.E) and an interim order as well.