The European Commission said Tuesday it has extended by another five years until April 2020 thevalidity of its existing legal framework exempting, if certainconditions are met, liner-shipping consortia from EU antitrust rules.
The decision comes days after China scuttled plans for the P3 Network
that Maersk, MSC and CMA CGM planned to operate on the major east-west
trades.
The European maritime consortia block exemption regulation allows shipping
lines with a combined market share of less than 30 percent to enter into
cooperation agreements to provide joint cargo transport services.
The commission said, “Such agreements usually allow liner shipping
carriers to rationalize their activities and achieve economies of scale.
If consortia face sufficient competition and are not used to fix prices
or share the market, users of services provided by consortia are
usually able to benefit from improvements in productivity and service
quality. The commission has therefore exempted such agreements from the
prohibition of anti-competitive agreements in Article 101 of the Treaty
on the Functioning of the European Union.”
It added, “After a public consultation, the commission has concluded
that the exemption has worked well, providing legal certainty to
agreements, which bring benefits to customers and do not unduly distort
competition, and that current market circumstances warrant a
prolongation.”
For consortia and alliances exceeding the 30-percent market share
threshold, the EC said the carriers have a responsibility to make sure
they are on the right side of the law, but that the commission will step
in if needed.
Earlier this month, Antoine Colombani, a spokesman for the
commission’s competition directorate said the commission did not intend
to open
proceedings in relation to P3, but last week China’s Ministry of Commerce blocked the proposal, saying “the three companies will form a tight combination, and their
share of transport capacity of Asia-Europe container liner
transportation will reach 47 percent, with remarkable increase of market
concentration.”
The EC said it “will continue to closely monitor market
developments and the conduct of companies to ensure that markets remain
open and competitive. In particular, in the context of the recent
developments in the sector, the commission will remain vigilant as
regards any risks for competition that may arise from the implementation
of maritime consortia and might intervene.”
The EC received 13 comments from companies and various organizations regarding the consortia framework.
In a joint submission, the World Shipping Council, the European
Community Shipowners’ Associations, and the International Chamber of
Shipping told regulators that since the commission last reviewed the
consortia regulation in 2008-2009 “an entire new category of very large
container vessels has been built and delivered in order to reduce unit
operating costs.” They also noted that bunker fuel prices, the single
greatest variable operating cost in liner shipping, doubled between 2007
and 2013.
The groups said with the recent and continuing introduction of very
large container vessels into the liner trades, the benefits of consortia
“are amplified
in today’s market. In the current situation, rising fuel prices and the
search for greater efficiencies through the use of larger vessels make
consortia an
even more important tool for the support of reliable and frequent
transportation services than was the case when the commission last
reviewed the
consortia block exemption.”
The World Shipping Council said it
welcomed the extension of the consortia block exemption regulation,
saying it offered a “safe harbor” under European competition law for
vessel-sharing arrangements that have a market share of up to 30
percent.
“Vessel-sharing arrangements are an established and
essential part of the liner shipping networks that carry the
international trade of the European Union and the rest of the world,”
said Christopher Koch, the president and chief executive officer of the
WSC. “Consortia allow carriers to provide their customers with better
services at lower cost, with improved environmental performance.”
He continued, “In this most international of businesses, it is essential
that the rules are clear and that everyone has the same understanding
of what those rules are. The consortia block exemption regulation
provides that clarity, which makes the system more efficient and more
predictable. That benefits everyone involved.”
Europe extends exemption for shipping consortia to 2020
