The director of terminal investments at TiL (Terminal Investment Limited), Patricio Junior, 64, went to the hearing of the TCU (Federal Court of Auditors) on Monday (8), knowing what the result would be. The thesis that the auction of Tecon 10, the megaterminal of the port of Santos, should take place in two phases, would prevail. In the first, all shipowners would be excluded, in an even more restrictive position than that presented by Antaq (National River Transport Agency).
The federal authority wanted to ban, initially, only shipowners with terminals in Santos. The objective, according to the agency, is to avoid market concentration.
Both scenarios would be contrary to MSC’s interests. TiL is a branch of the Swiss group which manages container storage.
The company is a partner, with Maersk, of BTP, a port terminal in Santos. With around 850 vessels in operation, MSC is responsible for 20% of the global container movement.
Excluded from the competition (as far as TCU is concerned), the multinational clings to the possibility that the Brazilian government considers the court’s recommendation as something optional. A possibility which goes against the position of the ministers of the Court.
Any discrepancy could once again disrupt the asset’s concession which promises to handle 50% of freight in the country’s main port.
If there is no way, Patricio Junior says the natural path will be to go to court. According to him, there is no shortage of arguments for this. The danger, according to him, is to close the auction to a few companies.
“We fight to the end, buddy. They don’t even let us compete,” he said.
How did MSC receive the TCU’s recommendation for a two-phase auction, with restrictions for shipowners? This is a very important asset for Brazil. Very important for Santos, very important for importers and exporters. We can’t make mistakes. This Monday (8), there were six votes for the restrictions and three votes against. The three votes in favor of free competition were very technical and based on facts and data. There were three very high-level votes. On the other hand, of the six votes cast in favor of the restriction, with the exception of that of the Minister of Revision (Bruno Dantas), all were political votes.
At no point during the session was it proven that it was illegal for us to participate. On the contrary, you have the TCU Public Prosecutor’s Office favorable to free competition, the Ministry of Finance favorable to free competition. We are a Brazilian company created 25 years ago. If you remove our SPC (Credit Protection Service), it’s clean. As for the TCU, our three votes were worth 30, while the six votes were political.
But the TCU recommendation is more restrictive than Antaq’s. According to the court’s recommendation, no shipowner can participate.
But it’s a recommendation, isn’t it? And there was no data or facts to support it. Soon you’ll be directing it at someone and that’s not what we want. This must be avoided. This is why the more open the process, the cleaner the process. The darker it is, the worse it is for Brazil.
Brazil, through Mercosur, must conclude an agreement with Europe. And then, the government can prohibit Danish (Maersk) and Swiss (MSC) companies from participating in the auctions in the country’s most important port without technical reason. What’s the problem with opening it up to everyone? At Tecon 10, you will compete against the three largest container operators in the world. And why? There is no underlying technical reason.
Do you think the process is managed?
It closes too much. It would be frivolous of me to say it that way (about targeting) because I believe that, until proven guilty, everyone is innocent. I do not believe that Antaq, when it chose this restriction, was in bad faith. It was an option. I do not believe that the six ministers who voted (for the restriction) acted in bad faith, quite the contrary. They are decent people, people of the highest standard.
Does this open the door to judicialization?
We need to avoid this as much as possible, but there will be no option if the government does not take a stand on the issue and uphold a state policy that TCU’s suggestions are recommendations only. This is not state policy. The Executive is the one that manages the country.
But isn’t the process already judicialized?
Maersk questioned it (in court) and it continues. MSC, not yet. And Minister (Benjamin) Zymler mentioned several points of disagreement between procedures which were no longer followed. The absence of a shipowner was never discussed at a public hearing. Why did this happen? What is the impact? No studies have been carried out on this subject. The reviewing minister did not provide arguments to support this part. But the judicialization is not something official because we have to wait for the announcement. There is still one more step to take, that of contacting the government. He may or may not accept these recommendations.
Do you think the possibility that the federal government will not accept the TCU recommendation is real?
Everything that hasn’t happened can happen. It is possible that the government will follow the TCU and follow the line of a free Brazil, open to foreign capital. The government certainly sees this.
The position of the TCU ministers is as follows sIf the government opts for a model other than the Court’s recommendation or that of Antaq, the case will have to return to court, otherwise it will be subject to a precautionary measure which would paralyze the auctions. Is there not a risk that this auction will be postponed for a long time?
I believe that TCU will not put Brazil and Santos in danger simply to defend a point that is not illegal, but simply controversial. The TCU, with its vision, its administrative function, and not that of Justice, should not… It could not make declarations. There is no case where one wins and the other loses, you always have to think about Brazil.
The port of Santos is excessively concentrated, verticalized, and it will get worse if the current president wins, right?
Three or four months ago, Cade analyzed the takeover of Santos Brasil by CMA CGM. They found nothing to prove any impropriety. Mathematically, all (port) operators operate anywhere. MSC currently has 20% of the world’s container capacity, and soon 25%. Today, one in five container ships comes from MSC. There is no such thing (excessive concentration). Why are there only three airlines in Brazil? Do they do any type of standing? No. The market is simply not big enough to offer more products. In the United States, there are nine or ten shipping companies because the market is bigger there. It’s all a question of proportionality.
So, do you really believe that when the auction takes place on B3, Will MSC present an offer?
I can’t think otherwise. We fight to the end, buddy. Let’s move on to the procedural part, what happens, and then let’s move on to the legal part. Baron de Coubertin said that the important thing is to compete with honesty, firmness and fairness. In the case of Tecon 10, they don’t let us compete.
RADIOGRAPHY
Patricio Junior, 64, graduated in nautical sciences from the Merchant Marine Academy. Ppssui MBA in finance and port management. He also studied executive development at IMD (International Institute for Management Development) in Lausanne, Switzerland, and terminal management at Lloyd’s Maritime Academy, England. He is also Chairman of the Board of Directors of Portonave SA, in Navegantes, Santa Catarina, and of IPM (Infraestructura Portuaria Mexicana), in Mexico.
About The Author
