Market Power : Ports - A Case Study of Post-Privatization Mergers

An emerging issue to privatized infrastructure sectors is how regulators should deal with proposed mergers that could potentially increase market power and lead to anticompetitive behavior. This note looks at the issues in the port sector, discussing the regulatory treatment of vertical and horizontal mergers. It focuses on Argentina, one of the first countries to concession its ports. In the early 1990s Argentina restructured and privatized its port system. As part of this process the government transferred ports to the provinces, which could choose to operate, concession, or close them. The note also analyzes the consequences of allowing a vertical merger between a terminal operator and a maritime transport company and the pros and cons of explicitly prohibiting horizontal mergers between terminal operators.