Thursday, November 28, 2013

More Antitrust Actions Against Container Shipping Lines Accused of Freight Rate Collusion

Accusations of Corruption Pervade the Industry as Authorities Attack Once Again
Shipping News Feature

RUSSIA – CHINA – EUROPE – Any regular reader will know the alarming quantity of corruption cases, both numerically and financially, which have swept the shipping and forwarding industry in the past few years. Now Russia’s antitrust authority, the Federal Antimonopoly Service (FAS), has initiated formal cartel activity proceedings against fourteen major container shipping lines, following an investigation earlier this year reminiscent of the raids the European Competition Commission carried out over two years ago. These EU investigations have also been hitting the headlines as they are believed to be behind the recent action taken by Brussels in its ocean freight rate price signalling probe.

The Russian offices of Maersk, MSC, CMA CGM, APL, K Line, NYK Line, OOCL, China Shipping, Hyundai Merchant Marine, ZIM, COSCO, Evergreen, Ocean Container Services, were all involved in unannounced raids in February of this year. Subsequently many cynics observed that the only notable exception from the action was Russia’s own largest shipping line, FESCO. The thirteen named companies have been cited in FAS antitrust proceedings, along with Ocean Container Services MSK, and are suspected of establishing or maintaining the market price of international ocean container shipping. Deputy Head of FAS Russia Alexander Kinev, said:

"Currently, ocean container shipments have a significant impact on the development of international trade. The cost of such transport is a significant share in the price of goods and price collusion in this market can have an extremely negative impact on the global economy as well as on the economy of individual states. When considering the case of the ‘ocean cartel’ FAS Russia's Commission will assess the actions of foreign shipping lines. There are the necessary legal grounds for doing this, and we hope for productive cooperation with foreign antimonopoly authorities."

Reports suggest that there are also fourteen container lines included in the EU’s investigation for anti-competitive behaviour with supposed confirmations from Maersk, CMA CGM and MSC. It is also believed that CSCL, COSCO Container Lines, Evergreen, Hapag-Lloyd, Hanjin Shipping, Hyundai Merchant Marine, MOL, OOCL, NYK Line, United Arab Shipping Company and ZIM are also embroiled in the price signalling case.

There have also been reports from China that two former members and one current member of senior staff from within the China Shipping’s group of companies have been placed under investigation by government authorities. Jia Hongxiang, former Vice Chairman of CSCL; Mao Shijia, former General Manager of China Shipping Tanker Company; and Liu Houping, Deputy General Manager of Production and Operation department at China Shipping Tanker Company are just the latest industry professionals to be implicated in the country’s anti corruption inquest following the inquiry into COSCO’s former Vice President Xu Minjie, who left the COSCO after allegations of corruption.

To fully comprehend the scale of antitrust activity in the industry of late simply type the word into the News Search Box at the top of the page.