A study by the Department of Justice-Office for Competition (DOJ-OFC) recommends clearing barriers to entry and introducing transparency of rates in the Philippine tug industry, a sector it described as lacking in healthy competition.
DOJ-OFC, in the second installment of its transport sector study series entitled “Addressing Competition and Regulatory Issues in the Tug Assistance Service Industry”, highlighted the supposed ills of the sector, including the lack of competition in tug assistance service; prevalence of exclusive contracts between tug assistance providers and port operators; cartel-like behavior and opaqueness in tug rates; the unfair advantage enjoyed by harbor pilots as tug operators; and non-registration by tug operators.
The study recommended reforms such as removing unnecessary barriers to entry; eliminating exclusive contracts between tug assistance providers and port operators; introducing transparency in tug pricing and agreed-on rates; developing rules and regulations concerning unfair business practices in ports; as well as imposing sanctions on erring tug operators.
“Instituting a healthy competition in the tug assistance industry creates a ripple effect in all the segments of the port sector,” Justice Secretary Leila De Lima said in a statement. “Clearing of competition barriers can effectively increase our port’s competitiveness and reduce the cost of transporting goods.”
DOJ assistant secretary and DOJ-OFC head Geronimo Sy added, “Each component of the supply chain plays a vital role in the country’s growing seaborne trade. We see that governance and regulation are closely linked to the issues of barriers to trade and lack of competition.”
The second transport sector study is part of the commitment of the OFC and the Philippine Ports Authority (PPA) to improve the level of competition and efficiency in the port sector.
The first of the series, “Liberalizing the Harbor Pilots Industry,” was issued in October 2014 to push for competition reforms in the port sector, particularly the removal of artificial barriers to entry in the harbor pilotage service industry.
The DOF-OFC was created in 2011 to administer economic justice in order to promote a culture of competition and level the playing field through guiding and enforcing competition policy and law. – Roumina Pablo
