BUSINESS/ECONOMY

A freight-rate inquiry

ANN WALMSLEY June 1 1987
BUSINESS/ECONOMY

A freight-rate inquiry

ANN WALMSLEY June 1 1987

A freight-rate inquiry

The investigators from the federal bureau of competition policy appeared without warning, bearing search warrants and proceeding to comb through financial records. As the scene was repeated at the Ontario offices of seven freight forwarding companies between May 4 to May 24, the investigators seized documents related to company pricing policies over the past 11 years. According to the warrants, the companies allegedly conspired to prevent competition in their industry, providing rail freight forwarding services from Toronto to points in Western Canada. The companies listed on the warrant to search and enter: Clarke

Transport Canada Inc., Consolidated Fastfrate Transport Inc., Cottrell Transport Inc., SSF Distribution Inc., TNT Canada Inc., Trans Western Express Ltd. and Westway Forwarding Ltd.

Officials at the bureau of competition policy would not reveal the reason for the investigation. But the Competition Act provides for an inquiry if the bureau receives complaints by any six Canadians that a company or association has restricted competition. Said Albert Birthelmer, vice-president of finance for TNT Canada: “Somebody must have filed

a complaint. But it is a surprise to me. We are in a very highly competitive industry.”

The price-fixing investigation will open up the relatively murky workings of freight forwarding and pool-car operations. Freight forwarders are not truckers or rail freight companies; they lease space on trucks or rail cars. Their

clients often do not have enough cargo for a full load, which means that the shipments are pooled with goods from other customers. But the companies do not own the vehicles, and as a result they are subject to few regulations. Said Allen Laxton, a Clarke Transport employee: “They have no limitations and no licences. Some are real fly-bynights.”

The investigators will now attempt to

determine from the seized documents whether the firms colluded to set rates and whether the pricing limited competition. But a similar investigation of alleged price-fixing in the trucking industry has demonstrated how complex the process can be. The federal government began investigating 20 western Canadian trucking companies and their tariff organization, Western Transportation Association, in 1968. Charges were laid in 1979, but they have still not been heard. A spokesman for the Canadian Truckers Association said that there was nothing “under the table” about their actions. He added: “There is no question that there was an agreement among the truckers to fix rates—we published them and sold them to the shippers. The question is, did it limit competition?”

According to lawyers associated with the forwarding companies, competition inquiries frequently end without charges. And says George Hebert, vice-president of Clarke Transport: “All I can say is that we have not done anything illegal.” But if the trucking investigation is anything to go by, it could be years before the questions raised by this month’s raids are settled.

ANN WALMSLEY

MARC CLARK

Ottawa

The price-fixing investigation will open up the relatively murky workings of freight forwarders and pool-car operators