Wednesday, November 5, 2014

Container Line Merger Gets Another Approval to Make Fourth Largest Box Freight Carrier

As Two Shipping Companies Take the Plunge How Closely Will the Authorities Watch the Vessel Sharers?
Shipping News Feature

BRAZIL – WORLDWIDE – The planned merger between container shipping lines Hapag Lloyd and Compañia Sud Americana de Vapores (CSAV) has received unrestricted approval from Brazil’s Administrative Council for Economic Defence (CADE). The merger, which was announced earlier this year, in April, will see the two lines join together to become the world’s fourth largest box freight carrier with some 200 vessels, an annual transport volume of 7.5 million TEU and a combined turnover of approximately €9 billion.

Regulatory entities in the US and the European Union, among others, have already given their approval and recently, the Chilean Antitrust Agency decided not to pursue with its investigation of the transaction. Approvals of a few jurisdictions are still pending but it seems the current fashion for closer association between major carriers continues apace. Straightforward mergers are of course relatively simple for the authorities to judge but other, less formal arrangements are more difficult to contend with.

Many observers will doubtless consider that, having gone to great lengths to dissolve the old style container conferences, the plethora of new ‘alliances’ give the lines a chance to conspire in matters that might otherwise be frowned upon by the world’s antitrust bodies. However it is a fact of life that the trade protection departments all around the globe, having profited enormously in recent years from perceived misdemeanours by the container carriers, are surely now to keep all the new ‘vessel sharing’ agreements under close scrutiny, whilst for the lines themselves it was essential to economise wherever possible and closer cooperation with competitors as regards cargo space availability would seem to be a powerful weapon in the armoury for this.