Demolishing the Norwegian Stevedoring Monopoly by use of EU Law

Demolishing the Norwegian Stevedoring Monopoly by use of EU Law

by Nicolay Skarning, Kvale Law Firm, Norway

During 2017 and 2018 the Norwegian monopoly on unloading and loading ships (stevedoring), established by collective agreements, was demolished by the use of EU Law

 – The Holship Case in the EFTA Court and the Norwegian Supreme Court

1.      Introduction 

Holship is a Danish owned freight company (forwarding goods) which offers its services in Norway, the rest of Scandinavia and in the Baltics. Part of the Norwegian operations is stevedoring services (unloading and loading ships) in the port of Drammen, one of the biggest ports in Norway. The Norwegian Transport Federation started boycott actions against the company in 2013, and threatened with international boycott through International Transport Workers Union in London. The boycott actions were finally found illegal under EU Law (EEA) by the EFTA Court in Luxembourg and by the Supreme Court of Norway, with the help of Kvale Law firm in Oslo, with help of other law firms in The Employment Law Alliance.

The case is relevant to all jurisdictions working under EU law, because Norway is part of the internal market of the EU by accession to the EEA Agreement (European Economic Area) from 1994. The EEA Agreement has equivalent provisions as found in the TFEU (Treaty of the Functioning of the European Union), with a Surveillance Authority in Brussel and a court in Luxembourg, like the EU system.

2.      The boycotts against Holship from 2013 

The boycotts against Holship in Drammen port started in 2013 and lasted in practice up to 2017, when it was clear that The Norwegian Transport Federation with its overall umbrella organization, The Norwegian Confederation of Trade Unions, accepted that the stevedoring monopoly, established through two of their collective agreements, and with a history of about 100 years, was illegal under EU law (EEA law), and consequently Norwegian law. The reason for this was that the purpose of the boycotts – to force Holship to sign a collective agreement with a monopoly (a priority rule with effect of a monopoly) on stevedoring services from a particular stevedoring office in the Drammen port, instead of Holship using its own employees –  was illegal.

Holship had a different collective agreement with its employees, although this was not a stevedoring collective agreement. However Holship and the employees were happy using its own collective agreement on all work in Holship, also stevedoring services, and the collective agreement assured that there was no “social dumping” (underpaid employees etc.) in Holship.

The boycotts consisted of blocking physically the stevedoring services of Holship, by using the unions members as physical walls standing at key places on the dock so that Holship personnel could not fulfill their tasks. Therefore Holship lost contracts and the boycotts were costly for them. In order not to be forced into the monopoly collective agreements, Holship did not become a member of the main employers’ union in Norway, The Confederation of Norwegian Enterprise (NHO). Instead they became a member of the smaller Norwegian Business Association (Bedriftsforbundet). The Norwegian Business Association has no collective agreements. But this organization did at the same time not have the economic means to support Holship financially.

3.      The legal process

In 2013 Holship and the Norwegian Business Association reached out to attorney Nicolay Skarning, head of the employment department in Kvale, a full service law firm in Oslo, and also the Norwegian member of the leading international network in employment law, The Employment Law Alliance. Legal proceedings were immediately initiated and a complaint was sent to the Council of Europe, based on an allegation that the Norwegian Transport Federation used organized force to impel Norwegian dock workers to become members. They organized almost 100 % of Norwegian dock workers, which was found rather surprising by the Norwegian Business Association. However, the complaint was dismissed in 2016 on the basis of lack of proof.

Subsequently Holship lost its legal proceedings both in Drammen City Court and in The Appeal Court. Holship then made an appeal to the Supreme Court and specified and concentrated further the EU (EEA) submissions of the case, being:

– The stevedoring monopoly, established through collective agreements, was a breach of EU Competition law, TFEU Articles 101 and 102 (EEA Agreement article 53 and 54), and

– The stevedoring monopoly was hindering the free establishment of business, making it impossible for Danish owned Holship to establish competing stevedoring services in Norway, therefor also an interstate hindrance ,  contrary to the internal marked, TFEU Article 49 (EEA Agreement Article 31).

4.      Holship wins the final legal battles

After having the lost the case in all legal instances(the District Court and the Court of Appeal)
Holship, with legal assistance of the Norwegian Business Association, represented by Kvales partner Jan-Erik Sverre and Kvales partner Kristin Valla, succeeded in the EFTA Court in 2015 and the Supreme Court at the end of 2016:

The stevedoring monopoly was (indirectly) declared illegal under EU law (EEA Agreement), Article 49 (EEA Article 31), because it was in contravention of the right of free establishment of business within the European Internal Market. Both the EFTA Court and the Supreme Court found that the completion rules were applicable, but it was not necessary in this case to make the competition law assessment of either illicit collective agreement with the object restriction on competition (TFEU Article 101/EEA Article 53)), or abuse of (collective) dominance (TFEU Article 102/EEA Article 54).

5.      The conclusions in the case: opening up of the ports to competition and better port services

A consequence of the case is that Norwegian ports through 2017 and 2018 are opening up to competition on stevedoring services, making these services better and more competitive, serving the shipping transport services to and from Norway. The legal basis of the case should help open up ports to more competition on stevedoring services in the whole of Europe.