In November 2011, Spain's competition authority, the National Competition Commission, descended harshly on the inland water transport sector, fining six ferry companies a total of around €16 million for operating price fixing and market allocating cartels on the Algeciras to Ceuta route. Since several countries including India are now enforcing or countries like Bangladesh, Nigeria, Malaysia and Cambodia are in the process of adopting modern competition laws, this example needs to stir them up to take action.

India's inland water transport sector consists of a variety of navigable waterways comprising river systems, canals, back waters, creeks, and tidal inlets; used for various purposes. It is used as passenger transport across rivers at numerous locations on all waterways in the country. Inland water transport is also important for tourism, a growing activity with economic potential in Kerala, Alappuzha and to a smaller extent, Kozhikode where houseboats are popular for the activity. The carriage of vehicles across areas such as West Bengal, Kerala and Goa also rely to some extent on inland water transport. Statistics from the Transport Research Wing, Ministry of Shipping indicate that during the period 2009-10, nearly 370.85mn tonnes of cargo was moved through inland water transport. The active players in the sector include both state-owned and private companies and associations.

Although water transport in India has a very marginal contribution to the overall transport movement (about 0.15 per cent in 2004), players in the sector enjoy brisk business as the industry has remained lucrative over the years. Water-based transport is characterised by low operating costs of fuel with the waterway - the main infrastructure - being naturally available without much maintenance and upgrading costs. In addition, some waterfront locations can only be accessed through water transport, giving business advantages to the players.

Bangladesh is a country with rivers criss-crossing the whole country and water transport is a major means of communication. Nigeria, Cambodia are other countries where inland water transport plays an important role. All these countries are without a competition law but in process.

In Cambodia, a CUTS (Consumer Unity & Trust Society) study in 2002 discovered that the passenger ferry service from Phnom Penh, the capital, to Siem Reap, the most popular tourist town was run by a cartel. Cut-throat competition among the eight private companies involved drove down prices drastically, resulting in the companies deciding to sit down and organise a price fixing cartel which drove prices up significantly (from US$5.00 to 10.00). In addition, a market allocating arrangement was also worked out, where only one boat provided boat transportation service in a day, although bigger companies were allowed more quotas. Unfortunately there was no competition law to deal with the issue, a problem existing up to now.

Eid is a major festival in all Muslim societies. On the eve of Eid in Bangladesh, staff of the government-owned Bangladesh Inland Water Transport Corporation indulged in price gouging by charging Taka 1800 instead of Taka 1200 per cattle-laden truck to ferry them across to Dhaka from another location. Naturally this was a result of corruption rather than official action, and was therefore denied by the authorities. But action was missing.

In Malaysia, a cartel activity resulted between Lumut and the island of Pangkor, after two firms, the Pangkor-Lumut Express Feri Sdn Bhd and Pan Silver Ferry Sdn Bhd got entangled in a price war in 2003. The price war reduced fares drastically (from RM10 in December 2002 to as low as RM1 in July 2003). This resulted in collusion between the two players, which eventually saw prices increasing back to RM10 in 2003. Malaysia too does not have a competition law, though it has just adopted one, whose implementation will begin in Feburary, 2012.

In June 2011, the Federal Competition Commission of Mexico imposed a ten million pesos fine on Cruceros Marítimos del Caribe, and a further 15 million pesos to another company Ruta Náutica del Caribe for cartel behaviour in the ferry services sector. Even in more advanced countries in competition law enforcement, collusion is also rampant. In Europe, the European Commission took measures against five ferry operators after an agreement to impose common currency surcharges on freight, following the devaluation of the pound sterling in September 1992. P& O European Ferries, Stena Sealink, SNAT, Brittany Ferries and North Sea Ferries, were fined a combined value of ECU 685, 000, with P& O European Ferries being fined the biggest fine of ECU 400,000.

While allegations are yet to be levelled against players in India, one cannot discount possibilities of anticompetitive practices. The sector can also easily escape scrutiny due to the fact that not much notice is taken of it, even though operators are enjoying brisk business. There are not many players in this industry in India, which makes it easy for them to coordinate behaviour. In addition, some companies are very dominant, which gives them power to cower competitors into submission through real or imagined price wars. Based on the statistics from the Transport Research Wing in the passenger ferry services, Hooghly Nadi Jalapath Paribahan Samabaya Samity, Kolkata has a dominant position as it carried 20.3 million passengers using 44 vessels during the 2009-10 period, while the second placed, West Bengal Surface Transport Corporation Ltd had a distant 6.8 million passengers from 23 powered vessels. The same pattern is also apparent in the cargo ferry services, where the leading company Sesa Goa Ltd could afford to carry over 6 million tonnes of cargo when second placed SV Salgaocar carried 1,5 million tonnes. Associations also play a very active role in the trade, making it easy to coordinate behaviour.

Thus conditions facilitating cartels are fulfilled, showing that India's inland water transport system too is vulnerable to anticompetitive practices. The sector is however yet to be scanned through competition lens, despite its importance in economic activity. Given the incidents of anticompetitive conduct that have been reported in other countries over the years, it is difficult to expect India to be an exception. Cartelisation in the sector would have bad consequences on the economy as well as on the public using the transport services, which would have an impact on poverty. Although the Competition Commission of India (CCI) has over the years attempted to understand the nature of competition in several potentially vulnerable markets, the nature of competition prevailing in the sector is yet to be explored. This calls for a more detailed focus from CCI.