Tuesday, September 29, 2009

Liner Anti Trust Exemption Confirmed Until 2015

But European Commission Reduces Market Share Threshold
Shipping News Feature

BRUSSELS, BELGIUM – The conditional exemption currently enjoyed by shipping companies from the EU’s antitrust legislation was extended by the commission yesterday for a further five years.

The regulation, used to restrict cooperation between ostensibly competing carriers, allows liner companies to enter into cooperation for the purpose of providing a joint service in transporting cargo (so-called "consortia"). The agreement, first introduced in 1995 and regularly extended since was due to expire next April.

There has been one significant change to the rules however. Exemption will only apply to shipping lines, containerised or otherwise, which carry a maximum share of freight on any route less than 30% of the total. The current limit is 35%.

The Commission's market investigation revealed the existence of a pattern of links between consortia and/or their members. The new Regulation clarifies that the Commission may withdraw the benefit of the block exemption, where such links have a negative effect on competition. Competition Commissioner Neelie Kroes said:

"Since 1995 liner carriers have been granted conditional exemption from the competition rules when operating joint services. As markets change, this exemption has to be reviewed. After careful examination the Commission has decided to amend and prolong the consortia Block Exemption Regulation for five more years. I am confident that this Regulation strikes the right balance between the interests of the liner carriers and those of transport users."

A consortium is a co-operation of shipping lines to provide joint maritime cargo transport services. Such agreements usually allow shipping lines to rationalise their activities and achieve economies of scale. If consortia are faced with sufficient competition, the users of the transport services provided by consortia (such as shippers) usually benefit from improvements in productivity and quality of service

Pic: EU Competition Commissioner Neelie Kroes