EC to renew consortium antitrust exemption with minor adjustments
The European Commission has published a preliminary draft for the five-year renewal of the regulation that grants antitrust immunity to liner shipping consortia serving European ports, while making minor adjustments to the current regulation.
Regulation No. 823/2000 on consortia, which includes vessel-sharing agreements and operational alliances between shipping lines, will expire April 25. The EC, which had already extended the first consortia rule of 1995 for five years, intends to extend their immunity again until April 2010.
Matthew Levitt, partner at the Brussels-based law firm Lovells, said the shipping industry welcomes proposed extension of the consortium regulation. “The commission recognizes the benefits from consortia,” he said.
Contrary to conferences, operationally focused consortia are seen by the EC and by shippers’ organizations as mild forms of carrier cooperation that also produce clear economic advantages.
During an industry consultation last year, the Brussels-based regulator found adjustments were required to clarify certain provisions of the regulation.
One of the proposed adjustments mentioned in the draft ruling defines the maximum allowed initial lock-in period of a new consortium agreement after which its member carriers can give notice that they want to leave the consortium. Another adjustment clarifies the situation when consortium members make a “substantial new investment” in the building or charter of ships designed specifically for the operation of the consortium service.
The original maximum initial non-withdrawal period of a consortium has been 18 months, while the maximum notice period has been six months.
The EC proposed in the draft ruling that, if the date of entry into force of the agreement is earlier than the date of commencement of the service, the initial period would be up to 24 months starting from either the date of entry into force of the consortium agreement or the date of entry into force of the agreement to make a substantial new investment into the joint maritime service.
In the case of a highly integrated consortium, defined as one with a high level of investment or with a net revenue pool, the initial non-withdrawal period would be up to 30 months calculated from either the date of entry into force of the consortium agreement or the agreement to make the substantial investment.
The revised consortium agreement would also revise the requirement that effective competition exists between consortium partners if they belong to a conference, stipulating that the conference concerned must allow either individual confidential contracts or independent rate action on conference rates.
The technical changes to the definition of the initial non-withdrawal period of new consortia agreements reflect comments made by industry during a consultation process. “The commission has been receptive to the requests put forward by the industry,” Levitt said.
The EC noted that Regulation No. 4056/86, which grants a common pricing immunity to liner conferences, is under review, and that the consortium and conference regulations are linked. To avoid undermining the review of the conference regulation, the EC said it should not introduce substantial modifications to the consortium regulation until the review process of Regulation No. 4056/86 has been completed.