EC IMPOSES 7-MILLION EURO FINES ON 15 ASIA/EUROPE CARRIERS
The European Commission has imposed fines of 7 million euro ($8 million) on 15 major shipping lines operating in the Asia/Europe trade for breaking European competition laws.
The EC said that the now-defunct Far East Trade Tariff Charges and Surcharges Agreement was “an illegal price agreement on the Europe/Far East trade.”
The punitive fines are:
* P&O Nedlloyd, 1.24 million euro ($1.38 million).
* Maersk Sealand/A.P. Moller, 836,000 euro ($929,000).
* Hanjin, “K” Line, Mitsui O.S.K. Lines, NYK, 620,000 euro ($689,000) each.
* DSR-Senator, Evergreen, Hapag-Lloyd, Neptune Orient Lines and Yangming, 368,000 euro ($409,000) each.
* Cho Yang, CMA CGM, Malaysia International Shipping Corp. and OOCL, 134,000 euro ($149,000) each.
Neptune Orient Lines is now the parent company of APL.
The carriers fined by the EC are members of the Far Eastern Freight Conference as well as five non-conference carriers. The non-conference operators are Cho Yang, DSR-Senator, Evergreen, Hanjin and Yangming.
Under the Far East Trade Tariff Charges and Surcharges Agreement, which operated from 1991 and disbanded in 1994, the conference and non-conference carriers agreed not to charge customers less than certain published surcharge levels, the EC said. In its decision, the EC rejected the carriers’ contention that their agreement on charges and surcharges was merely a “technical agreement” permitted under the European competition rules applicable to shipping services.
“Shipping lines operating within liner conferences benefit from an exceptionally generous exemption from the normal European competition rules,” said Mario Monti, European Commissioner for Competition. “It is important that a conference is faced by effective competition from independent shipping lines operating outside the conference.”
The carriers within the Far East Trade Tariff Charges and Surcharges Agreement had a combined market share of more than 80 percent between northern Europe and the Far East.
The EC said that the case “shows that the commission will act firmly where conference and non-conference shipping lines conspire together as a cartel.”
A spokesman for P&O Nedlloyd, the carrier that suffered the biggest fine, would not comment on the EC decision.
“It is totally unreasonable,” said Knud Pontopiddan, executive vice president of A.P. Moller/Maersk Sealand. “It is a very minor issue, it is a very old case,” he added.
A.P. Moller is still considering whether to appeal against the EC fines in court.
“We welcome the fact that the Commission has taken that decision,” said Chris Welsh, secretary general of the European Shippers’ Council. The ESC had lodged a complaint with the EC in 1994 against the Far East Trade Tariff Charges and Surcharges Agreement.
Welsh said that the latest EC move is an important decision because it is the first one taken on surcharges.
The fine set by the EC is lower than the 273-million euro ($300-million) fines levied on Trans-Atlantic Conference Agreement carriers in 1998.
The EC said that the 7-million euro fine on Asia/Europe carriers is “a modest amount explained by the fact that an agreement not to discount is less damaging than a price-fixing cartel.”
The EC calculated the fines on the basis of its published “fining guidelines.” The Brussels agency said the price agreement was a “serious” case, but not a “very serious” break of competition laws. A very serious case would normally be punished by fines of more than 20 million euro ($22 million) for each company.
The EC said that it also took into account the fact that the Far East Trade Tariff Charges and Surcharges Agreement was abandoned after the carriers received a commission statement of objections in 1994. The EC divided the carriers into four categories based on their size, with every carrier within a given category being fined the same.
The decision by the EC did not refer to its ongoing investigation into the equipment repositioning surcharge charged by conference and non-conference carriers last year in the westbound transatlantic trade. Earlier this year, the EC raided offices of transatlantic carriers to gather information on potential anticompetitive practices on surcharges in the Atlantic trade.
However, Welsh, of the European Shippers’ Council, said that the EC decision on the Asia/Europe surcharges case “is a clear warning to the liner shipping industry.”
The decision on the fines for surcharges “sets a precedent” that may apply to the pending investigation into transatlantic equipment repositioning surcharges, he said.