The block exemption order was issued Tuesday for vessel sharing agreements between liner shipping companies, and is scheduled to remain in effect until Aug. 8, 2022.
Hong Kong’s Competition Commission issued a block exemption order (BEO) on Tuesday under section 15 of the Competition Ordinance for vessel sharing agreements (VSAs) between liner shipping companies.
The order was issued in response to an application submitted to the commission in December 2015 from the Hong Kong Liner Shipping Association (HKLSA) for a BEO, in which the shipping association was seeking a BEO covering both VSAs and voluntary discussion agreements (VDAs), the commission said in a statement.
VSAs are agreements between shipping lines on certain operational arrangements, while VDAs are agreements pursuant to which shipping lines discuss certain commercial matters relating to particular shipping routes.
The order says that activities typically undertaken pursuant to VSAs are excluded from the application of the First Conduct Rule in the ordinance subject to certain conditions, including the following:
• The parties to the VSA do not exceed an aggregate market share limit of 40 percent;
• The VSA does not require or authorize shipping lines to engage in cartel conduct;
• And shipping lines are free to withdraw from the VSA without incurring a penalty on giving a reasonable period of notice.
The Competition Commission said it “decided not to issue a BEO for VDAs or the revised VDA scope which was proposed by the HKLSA in a supplementary submission to the commission, on the basis that it was not demonstrated that the relevant VDA activities meet the terms of efficiency exclusion.” The HKLSA is comprised of 16 shipping lines and shipping agents engaged in liner shipping to or from Hong Kong, and they collectively represent approximately 90 percent of the containerized liner industry in Hong Kong. HKLSA’s members include APL Co. Pte Ltd; Cheng Lie Navigation Co. Ltd.; CMA CGM (HK) Ltd.; COSCO Container Line Agencies Ltd.; Evergreen Star Hong Kong Ltd.; Hamburg Sud Hong Kong Ltd.; Hapag-Lloyd (China) Ltd.; Hyundai Merchant Marine (Hong Kong) Ltd.; “K” Line (Hong Kong) Ltd.; Maersk Hong Kong Ltd.; Mitsui O.S.K. Line (H.K.) Ltd.; N.Y.K. Line (H.K.) Ltd.; OOCL (H.K.) Ltd.; United Arab Shipping Agency Co. (HK) Ltd.; Wan Hai Lines (H.K.) Ltd.; and Yang Ming Marine Transport Corp.
However, the commission has provided guidance in its statement of reasons regarding which VDA activities may give rise to competition concerns, and which would be unlikely to contravene the ordinance.
The Competition Commission is issuing a six-month grace period, which will end Feb. 8, 2018, for parties to any VSAs that do not benefit from the order and VDAs, allowing them to make any changes they consider necessary to their commercial arrangements.
The order will remain in effect until Aug. 8, 2022, unless it is revoked by the commission in accordance with the competition ordinance.
The commission will review the order no later than Aug. 8, 2021, but can review the order at any time.
The HKLSA is comprised of 16 shipping lines and shipping agents engaged in liner shipping to or from Hong Kong, and they collectively represent approximately 90 percent of the containerized liner industry in Hong Kong.
HKLSA’s members include: APL Co. Pte Ltd; Cheng Lie Navigation Co. Ltd.; CMA CGM (HK) Limited; COSCO Container Line Agencies Ltd.; Evergreen Star Hong Kong Ltd.; Hamburg Sud Hong Kong Ltd.; Hapag-Lloyd (China) Ltd.; Hyundai Merchant Marine (Hong Kong) Ltd.; “K” Line (Hong Kong) Ltd.; Maersk Hong Kong Ltd.; Mitsui O.S.K. Line (H.K.) Ltd.; N.Y.K. Line (H.K.) Ltd.; OOCL (H.K.) Ltd.; United Arab Shipping Agency Co. (HK) Ltd.; Wan Hai Lines (H.K.) Ltd.; and Yang Ming Marine Transport Corp.
“Certain shipping lines operating in Hong Kong are not members of the applicant. As the application is in respect of liner shipping agreements generally, any carriers which are not members of the applicant but are party to such agreements are also covered by the Commission’s response to this application,” the Commission said.
Hong Kong’s Competition Commission issues BEO for liner shipping VSAs
