Hapag-Lloyd, UASC Merger Gets Nod from European Commission

Image Courtesy: Hapag Lloyd

The European Commission has given its approval to German shipping major Hapag-Lloyd’s proposed acquisition of Dubai-based shipping company United Arab Shipping Company (UASC).

The clearance is conditional on the withdrawal of UASC from a consortium on the trade routes between Northern Europe and North America, where the merged entity “would have faced insufficient competitive constraint,” the European Commission said.

“European companies rely on container liner shipping services for their transatlantic shipments. It’s very important that the markets remain open. The commitments offered by Hapag-Lloyd ensure that the takeover will not lead to price increases on the routes between Northern Europe and North America,” Commissioner Margrethe Vestager, in charge of competition policy, said.

The merger of the two competitors will create the fifth largest container liner shipping company worldwide.

The Commission examined the effects of the merger on competition in the market for container liner shipping on thirteen trade routes connecting Europe with the Americas, the Middle East, the Indian Subcontinent, the Far East, Australia, New Zealand and West Africa, as well as Northern Europe with the Mediterranean, and found that the merger, as initially notified, would have created links on the Northern Europe – North America trade routes between the consortia and alliances in which Hapag-Lloyd is a member and the NEU1 (ex-Pendulum) consortium, in which UASC is a member.

In order to address the Commission’s competition concerns, Hapag-Lloyd said that it would terminate the participation of UASC in the NEU1 consortium, which would entirely remove the additional link between Hapag-Lloyd’s and UASC’s consortia, that the transaction would have created on the Northern Europe – North America trade routes.

Although UASC will continue to operate as part of the NEU1 consortium during the notice period to guarantee an orderly exit, a monitoring trustee will ensure that no anti-competitive information is shared between the NEU1 consortium and the merged entity during that notice period.

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

Hapag-Lloyd added that the company has “approvals of three more authorities pending now. For instance China, Japan, South Korea also approved already besides some others.”

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