Western Cape Business News

Send  Share  RSS  Twitter  20 Apr 2009

MARINE: Settling Down At A-Berth


Recent Western Cape Business News

SMALLER operators in the Cape Town ship repair services industry  is aghast that the merger between the two biggest ship repair companies DCD Dorbyl and Globe Engineering has been given the greenlight by the Competition Tribunal.

But there were some placatory pronouncements from the Competition Tribunal around limiting the influence that the merged entity will have in Transnet National Port Authority’s all-important A-Berth project.

Last month CBN reported that the Competition Commission had recommended the merger after an extensive investigation into whether the transaction would “substantially prevent or lessen competition” in the ship repair market.

The major issue around the merger is that DCD Dorbyl and Globe are involved in the A-Berth project in the Cape Town harbour – a special facility designed for future ship repairs to oil and gas vessels.

A-Berth is being developed under the auspices of German industrial giant Ferrostaal – a deal that forms part of the offset programme attached to SA’s controversial arms deal tender.

A number of ship repair companies indicated to CBN that the merger would effectively push other operators in the ship repair and maintenance sectors out of the Cape Town port.

They noted that not only would the deal create a monopoly in the harbour, but the rest of the facilities that make up the infrastructure – like the dry-dock (which is only operational at mid-year) were ‘melting down’ fast.

While the Competition Commission recommended the merger to the Competition Tribunal without conditions, the latter has set some conditions that might offer some cold comfort to other ship repair companies.

The key condition is that if the DCD Dorbyl/Globe entity took a sub-lease for the A-berth area in the next five years, the merged entity would lease only 50% of the what is termed “the lay down area”.

Although having half of A-Berth at its beck and call, putting the DCD Dorbyl/Globe entity in a formidable position, the Competition Tribunal’s ruling should allay some of the fears of smaller operators around being completely squeezed out of A-Berth.

A few parties in Cape Town ship repair services indicated they would wait to “see how things panned out in practice” before responding too enthusiastically to the Competition Tribunal’s 50% condition.

But it’s worth noting that the Competition Tribunal did recognise that “A-Berth was an essential facility to firms conducting business in the ship repair industry”, and – perhaps more importantly - that exclusive use by the merged parties would be “to the detriment of other market players.”

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