‘Unfair’ offshore conveyancing stifling competition

Pilot boats carrying out offshore conveyance works are unfairly seeking to dominate the market, a shipping company has claimed.

Anthony Miggiani, director of A&J Miggiani Offshore Services, claims the Maritime Pilots Cooperative is using its statutory pilotage monopoly to aggressively cross-subsidise a more recent pursuit in his own field of operations. 

All ships of a certain tonnage that arrive in Maltese ports must be serviced by pilot boats that manoeuvre them to safe entrances in and exits from the ports. Since 2003, all pilotage work has been carried out by the Malta Maritime Pilots Cooperative that was established in the legal reform introduced that year. 

However, since 2010, harbour pilots have also been carrying out offshore conveyance, such as the delivery of supplies, personnel transfers and garbage disposal. This has naturally placed them in direct competition with A&J Miggiani, the Maltese pioneers in offshore ship conveyance. 

“We have been struggling as a result of this unfair competition for the past five years,” Miggiani told MaltaToday. “The cooperative is illegally using its profits from its pilotage monopoly to subsidise its conveyance activities.” 

Moreover, he claimed that some of the pilot boats carrying out conveyance works were either financed by the EU or purchased from the government on the cheap for the purpose of carrying out pilotage works. 

“The pilots are trying to stifle competition,” Miggiani said. “To add insult to injury, they have now poached two of my staff – a captain who has been employed with my company for 22 years and a shipmaster who has been employed with us for 16 years. They are after the crème de la crème now. Last month, they purchased two supply vessels that must have cost some €2 million and will probably operate them against our business.” 

The Maritime Pilots Cooperative vehemently denied breaching competition regulations. Chief pilot Jesmond Mifsud said that certain conveyance services were provided by a separate company, Port Logistics Operations Ltd, that is owned by a group of maritime pilots. “The financing of conveyance operations and of all vessels and equipment has been done through private financing,” Mifsud said.

“We do not restrict our members from carrying out any conveyancing or other work which is not in conflict with the cooperative or its contractual obligations. Given the different nature of pilotage and conveyancing, there is no cross-business between the two. The cooperative carries out its contractual obligations on pilotage and does not handle any conveyance matters.”

He added that the cooperative was contractually obliged to make available four pilot boats to carry out pilotage services. “We are contractually required to keep one vessel equipped for pilotage in each port (Grand Harbour and Marsaxklokk) and two additional vessels available to carry out the service.” 

Yet the cooperative has expanded the fleet over the years and now boasts seven pilot boats – Alpha, Bravo, Charlie, Delta, Echo, Foxtrot, and Ohio. This means that three pilot boats are free to carry out conveyance work once the cooperative’s contractual requirements are satisfied.  

Transport Malta, responsible for the regulation of pilotage, refused to comment as the case is being reviewed and evaluated by the Office of Fair Competition.   

However, Mifsud said that TM carried out its own investigation and told the cooperative it was satisfied that no anti-competitive practices took place, and that no further action would be taken on its end.

Miggiani said that Transport Malta had not similarly written back to him.

Miggiani first complained to the Office of Fair Competition in July 2010, but after a decision was not handed down two years later, he wrote to then-prime minister Lawrence Gonzi, who said he would refrain from intervening in the review process.

In September 2013, Prime Minister Joseph Muscat set up a meeting for Miggiani with Transport Malta. Five months later, Miggiani wrote back to Muscat complaining that no progress had been made.

Miggiani said he is now strongly considering taking the matter to the European Commission, drawing parallels with how the EC fined the German post office Deutsche Post for having subsidised its parcel service through its legally protected monopoly on letter mail.