TACA AND EUROPEAN COMMISSION REACH COMPROMISE
The European Commission said it intends to approve the revised Trans-Atlantic Conference Agreement of seven major Atlantic lines, notified in 1999.
The EC said it intends to take a decision finding that the remaining aspects of the notified agreement not already cleared either benefit from immunity under Regulation No. 4056/86 or qualify from exemption under the European treaty’s article 81(3).
The EC competition directorate also invited interested parties, including shippers, to submit comments within 30 days on its proposed decision. Its decision may be revised following analysis of the comments, a source at the EC said, but the commission is satisfied that TACA is not anti-competitive.
The final clearance decision will follow almost a decade of legal wrangling between the EC and transatlantic conference carriers, initially triggered by the carriers’ controversial Trans-Atlantic Agreement of 1992/1993.
EC competition lawyers said that TACA shipping lines have made concessions on the contents of their cooperative agreement to address competition concerns, in particular on whether confidential service contract data could be exchanged between carriers.
“The members of the TACA have made changes and given undertakings,” the EC said. “These changes and undertakings include awarding the task of collecting and aggregating confidential individual contract data to an independent third party and ensuring that, with certain limited exceptions, no carrier-specific information not in the public domain is either gathered by, or distributed to, the TACA secretariat or the parties,” it added.
As expected, the EC said that it will allow TACA to regulate capacity, but only under certain conditions and for limited periods of time. Any TACA capacity management program would have to deal with “a short-term fluctuation in demand” and comply with other European competition rules. The EC also wants TACA to provide reports before, during and after the implementation of such programs.
TACA carriers have amended their agreement to include “an undertaking not to increase any tariff rate in conjunction with any capacity regulation program or to create an artificial peak season,” the EC said.
If TACA lines comply with the conditions of the agreement, there is no risk that the agreement will lead to the elimination of competition in the market, the EC commented.
The shipping lines of the revised TACA agreement of 1999, also known as “TACA 2,” are Atlantic Container Line, Hapag-Lloyd, Mediterranean Shipping Co., Maersk Sealand, NYK, OOCL and P&O Nedlloyd.
The EC said that TACA carriers have seen their combined share of the transatlantic trade drop from more than 60 percent in 1995 to about 50 percent today, and they are “subject to considerable internal and external competition.”
“The introduction of confidential individual service contracts, made possible by the U.S. Ocean Shipping Reform Act of 1998, has dramatically increased competition between the members of the TACA and has reduced the proportion of cargo carried under the conference tariff,” the EC said.
The EC will publish a formal announcement explaining its preliminary decision on Monday.
Under European law, TACA carriers have been able to implement their revised agreement without waiting for the EC ruling. The formal regulatory clearance will provide clarifications about which activities are permissible in the transatlantic and other European trades.
However, the TACA/EC compromise is not the end of legal friction between transatlantic shipping lines and the Brussels-based regulator. Legal appeals by TACA and its predecessor, the Trans-Atlantic Agreement, are expected to go before European courts early next year.