Tuesday, April 11, 2017

World's Largest Container Shipping Line Has Purchase of Competitor Approved

European Commission Allows Acquisition Subject to Restrictions
Shipping News Feature
DENMARK – GERMANY – The European Commission has cleared the proposed acquisition of German container line Hamburg Süd by the Danish competitor Maersk Line, though subject to conditions, with the Commission citing concerns on the potential for the combined company to restrict trade on certain routes. Commissioner Margrethe Vestager, in charge of competition policy, said:

"Competitive shipping services are essential for European companies and for the EU's economy as a whole. The commitments offered by Maersk Line and Hamburg Süd will maintain a healthy level of competition to the benefit of the very many EU companies that depend on these container shipping services."

The EC highlighted that like several other carriers, Maersk Line and Hamburg Süd offer their services on trade routes through cooperation agreements with other shipping companies via alliances or consortia based on vessel sharing agreements where members decide jointly on capacity setting, scheduling and ports of call, all of which are important parameters of competition.

The Commission examined the effects of the proposed merger on competition in this specific market for container liner shipping on seventeen trade routes connecting Europe with the Americas, Asia, the Middle-East, Africa and Australia/New Zealand. They found that the merger would have created new links between the previously unconnected entities Maersk Line and five of the consortia Hamburg Süd belongs to. The alliances in question are:

 Trade Route


Northern Europe to Central America / Caribbean

Eurosal 1/SAWC

Northern Europe to West Coast South America

Eurosal 2/SAWC

Southern Europe to Middle East


Mediterranean to West Coast South America  CCWM/MEDANDES
Mediterranean-East Coast South America MESA

According to the Commission's analysis, if no action were to be taken, the new links would have resulted in anti-competitive effects on the corresponding five trade routes (Northern Europe and Central America/Caribbean; Northern Europe and West Coast South America; Northern Europe and Middle East; Mediterranean and West Coast South America; Mediterranean and East Coast South America). In particular, these links could have enabled the merged entity to influence key parameters of competition, such as capacity, for a very large proportion of those markets, to the detriment of their commercial customers and, ultimately, of consumers.

The proposed transaction would also create limited links between the two companies in the markets for short-sea shipping and ‘tramp services’ (unscheduled, on demand shipping), as well as limited links between the two companies' activities in container liner shipping and the container terminals, harbour towage, freight forwarding, container manufacturing and inland transportation sectors where Maersk Line or other companies belonging to the Maersk Group are active. However, in both areas, the Commission found no competition concerns, in particular because several other service providers are active in these markets.

In order to address the Commission's competition concerns, Maersk offered to terminate the participation of HSDG in the five consortia in question. Hamburg Süd will continue to operate as part of the five consortia during the notice period to guarantee an orderly exit. However, a monitoring trustee will ensure that no anti-competitive information is shared between these five consortia and the merged entity during that notice period.

In view of the proposed remedies, the Commission concluded that the proposed transaction, as modified, would no longer raise competition concerns. The decision of the Commission is conditional upon full compliance with the commitments.