Select Committee on European Scrutiny Seventh Report


COM(01) 35

Commission Communication: Reinforcing quality service in sea ports: A key for European transport.

Draft Directive on market access to port services.


Commission staff working document on public financing and charging practices in the community sea port sector.

Legal base: Article 80(2) EU; co-decision; qualified majority voting
Document originated: (a) 13 February 2001
(b) 14 February 2001
Forwarded to the Council: 16 February 2001
Deposited in Parliament: 9 March 2001
Department: Transport, Local Government and the Regions
Basis of consideration: EM of 22 March 2001
Previous Committee Report: None; but see (18751) 13615/97: HC 155-xvi (1997-98), paragraph 7 (11 February 1998) and HC 155-xxx (1997-98), paragraph 9 (10 June 1998)
To be discussed in Council: March 2002
Committee's assessment: Politically important
Committee's decision: (Both) Not cleared; further information requested


7.1  In December 1997 the European Commission published a Green Paper on Sea Ports and Maritime Infrastructure.[40] It was intended to launch a debate on policies for ports which would increase port efficiency, integrate ports into the trans-European transport network and ensure free and fair competition in the port sector. The Green Paper envisaged, among other measures, developing a framework for port charging, reviewing the rules on state aids for ports, and developing a regulatory framework aimed at liberalisation of the port services market in the main ports. The Government supported the funding of ports on a commercial basis, with full cost recovery, and liberalisation and competition in the provision of port services, while stressing the need to avoid complex and unnecessary regulatory burdens.

The documents

7.2  In February 2001 the Commission issued a Communication on sea ports, including a proposal for a Directive on market access to port services (e.g. pilotage, towing and mooring). This was accompanied by a staff working document on public financing and charging practices in the EU sea port sector. The Commission reports its main conclusions as follows:

    —90% of the Community's maritime trade is estimated to be handled in ports where investment and other decisions are, to varying extents, made or at least influenced by public bodies;

    —public investments in port projects represent between 5 and 10% of all Community transport infrastructure investments;

    —the transparency of public financial flows is unsatisfactory;

    —charging and cost recovery systems vary considerably, and cost recovery is not always the main objective; and

    —access to the port services market is increasing, but selection procedures where the number of service providers is limited are unclear and unsatisfactory.

7.3  The Commission believes that application of the Transparency Directive (2000/52/EC, relating to public undertakings) and the requirement for separate accounts included in the proposed Directive on market access to port services will lead to considerable improvement in transparency in the public funding of ports. As regards state aids to ports, the Commission argues that any attempt at clarification would at present be a theoretical exercise and that clarification should be achieved through case law, though it will continue to carry out case-by-case examinations.

7.4  The Commission says that, while restrictions on provision of port services have gradually been removed in many areas, this is not the case for port pilotage, towing and mooring, and consultations have indicated widespread support for a regulatory framework at Community level with more systematic rules on access to the port services market. A formal framework of competition for the provision of port services is proposed where practical constraints justify limiting the number of service providers in a port. The Directive would cover all commercial port services, and would apply to all EU ports open to general commercial traffic handling an average of over 3 million tonnes and/or 500,000 passenger movements in the past three years.

7.5  The Explanatory Memorandum from the then Minister for Shipping and Ports at the Department of the Environment, Transport and the Regions (Mr Keith Hill) summarises the main provisions of the Directive as follows:

    "—Member States must designate 'competent authorities' to implement the Directive. The competent authority would be responsible for deciding whether or not the number of service providers should be restricted, considering applications for authorisations and deciding the outcome of any competitive tendering process.

    — Member States would have an obligation to ensure that providers of port services and self handlers have access to the port facilities they need for their activities. Member States may require providers of port services and self handlers to obtain prior authorisation. Eligibility criteria can best be summarised as aiming to ensure fitness for purpose. The authorisation may also impose public service requirements relating to issues such as safety and quality.

    — Where no restriction is placed on the number of service providers in a port, existing concessions would be left undisturbed. All new concessions would be subject to a maximum period of 25 years.

    — The competent authority may decide to limit the number of service providers in any port should there be good reason in terms of constraints on space, capacity and/or maritime safety. In such cases there must be a minimum of two providers for each category of cargo handling unless there are exceptional circumstances relating to traffic volume or type.

    — The competent authority must run an open and accountable tendering process to select such restricted service providers. This must be publicised in the Official Journal. All concessions would be subject to a maximum period of 25 years. As long as opportunities are advertised the Commission sees no problem if the offer to tender for provision of specific port services is not taken up.

    — Where the number of port service providers is to be limited by competitive tender; transitional rules would apply to protect the interests of existing providers who have made significant investment in moveable and immovable assets.

    — There is no bar to port authorities being designated as the competent authority and/or for acting as a service provider. However, if the competent authority wishes to limit the number of service providers and the port authority wishes to tender to provide the services, the port authority cannot be the competent authority deciding the outcome of the competition.

    — A comprehensive appeals procedure must be put in place. This must allow recourse to a national court or independent public authority. All decisions made by appeal bodies must be subject to judicial review should this be required.

    — Port authorities which provide port services would be expected to keep separate accounts for each service. These accounts must be subject to independent scrutiny."

The Government's view

7.6  The Minister states that:

    "The proposed Directive raises a range of important issues for ports and their users. In particular, if the number of service providers is limited in a port, it would appear to introduce a 'landlord and tenant' structure with tendered concessions. This may not take sufficient account of the structure of the majority of the UK ports industry or the special circumstances of ports in peripheral areas serving lifeline ferry service and related routes. It seems likely that the most significant impact of the proposals would to be where the number of service providers is limited in this way. Where the number of service providers is not limited, it appears that the rules on competitive tendering and selection would not apply, and the proposals might have little impact.

    "Considerable clarification of the proposed Directive, and the intention behind specific requirements, will be needed before an accurate assessment can be made of the full potential impact on the port sector and its users. The principles underlying the proposal broadly concur with the Government's position on market liberalisation and competition in the provision of services, subject to appropriate safeguards and standards."

7.7  The Government planned widespread consultation on the proposed Directive within Government, the port sector, its customers, service providers, trade unions, trade associations and other interested parties. It also notes that there would be regulatory costs for Government and industry, including the costs of setting up and managing an appeals process, and that a Regulatory Impact Assessment would be produced in the light of the information received from those consulted.


7.8  The proposals are clearly of considerable importance to the UK ports industry. We note the Government's support for the principles underlying the proposals, including market liberalisation and competition in the provision of services, and also its caution about some of the detailed provisions and the possible cost. We ask the Minister to send us information on the result of the consultation and a copy of the Regulatory Impact Assessment when they are available. In the meantime, we hold the documents under scrutiny.

40  (18751) 13615/97; see headnote to this paragraph. Back

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