A European Commission (EC) draft regulation is set to extend by four years a competition rules exemption for liner consortia that was due to expire in April 2020
The EC’s draft regulation is proposing to extend the exemption -- which gives antitrust protection to container lines trading in Europe under cooperative vessel-sharing agreements with other lines so long as the companies involved hold a combined share of less than 30% of the market -- from its current expiry date of April 2020 until April 2024.
The move has attracted praise from container shipping interests and criticism from shippers and port groups.
Liner shipping lobby the World Shipping Council (WSC) commended the EC’s decision.
WSC chief executive John Butler reportedly said "Vessel sharing arrangements are an established and essential part of the liner shipping networks that carry the international trade of the European Union and the rest of the world.”
The Global Shippers Forum (GSF) expressed its disappointment with the Commission’s position. Earlier this year, the GSF said the exemption should not be renewed.
Secretary general James Hookham said they disagreed “on several points with its (EC’s) reasoning,” adding “shippers are well used to similar pooling arrangements in the aviation sector, which allows code-sharing arrangements to be established for the same aircraft. But these seem to be fully compatible with EU competition law without the need for a block exemption. What is it about the global shipping lines that warrants this form of exceptional treatment under competition law?”
Last month, the European Shipper’s Council said the BER has “not contributed to better services in maritime transport for shippers as it aimed to,” and an OECD think tank reported in 2018 that the BER has not improved service levels for trading and production companies.
The European Commission’s consultation period on the draft regulation runs until 18 December 2019.
In EU competition law, agreements between companies that may distort or restrict competition are prohibited. However there exist certain categories of agreements that may be exempt – block exemptions. This is because the benefits to competition from these agreements outweigh the anti-competitive effects that might arise. Such agreements are exempt subject to meeting specific conditions.
Potential extension of block exemption
There is currently a block exemption for container lines in place dating from 2010: regulation No 906/2009. The exemption was extended in 2014 to apply until 25 April 2020.