EC calls for end to liner conferences
The European Commission today, as expected, proposed to repeal the European Council Regulation 4056/86, which grants liner conferences an exemption to set common freight rates and cooperate on capacity.
“Repealing the exemption will benefit EU exporters by lowering transport prices whilst maintaining reliable services. This will enhance the competitiveness of EU industry,” the EC said. “Liner conferences do not deliver the benefits for which the block exemption was established and the commission’s impact assessment shows that lower transport prices are likely to result from the block exemption’s repeal. The impact on the shipping industry itself is also expected to be positive: service quality and innovation are likely to improve,” the EC added.
The decision marks the end of the EC’s near three-year review process into the validity of the conference system, although the proposal isn’t likely to come into law for at least three years, as the proposal has to be passed by the EU’s Council of Ministers and also go to the European Parliament for consultation. Thereafter, the EC will publish guidelines on the application of the competition rules to the sector and to examine any potential replacement model, including the European Liner Affairs Association’s (ELAA) proposed information exchange forum.
“This is the beginning of the end, and we very much hope the shipping industry sees it the same way. Liner carriers will now need to examine how they should organize themselves based on normal practices of trade associations,” said Nicolette van der Jagt, secretary general of the European Shippers’ Council (ESC).
“ELAA has been in a constructive dialogue with DG Comp (the European Commission’s Directorate General for Competition) since September of this year. We have been reassured in recent weeks by a statement by DG Comp that we ‘are on the right track’ with our proposal for a regulatory regime in place of Regulation 4056/86 and look forward to continued discussions in the New Year,” said Chris Bourne, the ELAA’s executive director.
“These guidelines will be most welcome as the industry requires clarity about the legal situation post the conference system, trading as it does within an international context. In addition, a two-year sunset clause will give us time to adapt from the old conference system to the new regime. Most importantly this transition period will also allow time for us to hold discussions with shippers’ bodies and infrastructure providers and to address the complexities caused by the fact that other regulatory regimes outside the EU, will continue to support conferences,” Bourne added.
The ESC is opposed to the ELAA’s existing proposals. “Accepting the ELAA proposal as it is today would remove all the pro-competitive effects of the abolition of the conference system,” van der Jagt said.
“The repeal could lead to a clearing of the desk, signaling that the conditions were then right for shippers and their representatives to finally sit together to discuss with the liner industry initiatives that build on efficiency savings throughout the supply chain, that enable lines to be responsible to the needs of a vast array of customers,” van der Jagt said.
“The European shipping industry is strong and has everything to gain from a competitive market. Customers are clamoring for business in this industry to be conducted as it is in all other sectors. I call on the council to adopt this proposal quickly so that the benefits to the EU economy can kick in,” said Charlie McCreevy, the EC’s Commissioner in charge of the proposal.