Tuesday, February 21, 2017

Authorities Fine More Container Shipping Lines in Anti-Competitive Prosecution

China Adopts Western Methods of Discouragement
Shipping News Feature
CHINA – WORLDWIDE – China's Ministry of Transport has fined 14 container shipping lines a total of 239 million RMB (approx. $347,000) following allegations that the shippers violated the country's competition laws over inconsistencies in the publishing and reporting of freight rates. The fines may be small in relation to some recent cases further west but represent an intention by the PRC to continue to harden attitudes to the way business in the country is conducted, particularly by foreign entities, with antitrust and anti-competition issues in mind.

The Chinese authorities say they aim to maintain a viable maritime sector by cracking down on what they perceive as harmful low-cost competition and ‘zero negative tariff’ behaviour. Checks were carried out with inspectors looking into possible anti-competitive behaviour by several prominent liner companies, which found the 14 ocean freight carriers either failed to record or recorded inaccurate information on their freight rates, with some reported to display zero rates.

So far, the Chinese transport ministry has spoken with eight of the companies involved, including Hamburg Süd, Wan Hai Lines (and separately its Singapore office), Evergreen, CMA CGM, Gold Star Line, Heung-A Shipping, and Korea Marine Transport (KMTC). Whilst the remaining six companies have yet to be confirmed to be part of the anti-competitive action, and believed to have committed less serious offences than the eight, local press reports suggest that these companies are MCC Transport, COSCO, Zim, HMM, Maersk Line, and NYK.

This is of course not the first time that the authorities have prosecuted maritime carriers as on New Years Eve 2015, China’s National Development and Reform Commission(CNDRC) imposed fines totalling RMB 407 million (approximately $60+ million) on seven RoRo shipping lines after an investigation into alleged price-fixing and market sharing that lasted almost a year and a half. This was the first prosecution under Article 13 of the Anti-Monopoly Law and, as we have seen with other such cases the eighth company involved was exempted for self-reporting whilst it cost the others between 4 and 9% of their Chinese sales.

In that case NYK were the ones to escape penalty as the lead whistle blower, it remains to be seen which of the box carriers started the ball rolling in this case but again the Japanese company is in the frame. This latest prosecution backs up a CNDRC statement at the time which confirmed it was meeting with various other regulators worldwide to formulate a cohesive policy to deal with antitrust and anti-competitive practice matters in the future.