European Commission Seeks Comments on Future Regime for Liner Shipping Consortia

ContainershipIllustration; Image Courtesy: Pxhere under CC 2.0 license

The European Commission is inviting comments on the regulation exempting liner shipping consortia from EU antitrust rules that prohibit anticompetitive agreements between companies, known as the “Consortia Block Exemption Regulation”.

Given that the regulation will expire on April 25, 2020, the commission has launched a consultation seeking to collect views from stakeholders.

These comments are to assist the commission’s assessment of the impact and relevance of the regulation and provide evidence for determining whether it should be left to expire or prolonged, and if so, under which conditions.

In particular, the European Commission is seeking the views of shipping companies, their clients — shippers and freight forwarders, port operators and their respective associations. Other interested parties include industry analysts, academics, and law firms specializing in competition law and the maritime sector. The competition authorities of the EU Member States will also be consulted.

All stakeholders are invited to submit their views on the commission’s consultation website until December 20, 2018.

Liner shipping services comprise the provision of regular, scheduled non-bulk maritime cargo transport on a specific route. They require significant levels of investment and therefore are regularly provided by several shipping companies cooperating in consortia agreements. Consortia can lead to economies of scale and better use of the space of the vessels. A fair share of the benefits resulting from these efficiencies can be passed on to the users of the shipping services in terms of better coverage of ports and better services.

Container shipping organised on the basis of liner consortia accounts for the majority of non-bulk freight carried by sea to and from Europe. Competitive shipping services are therefore essential for the EU’s economy as a whole.

EU law generally bans agreements between companies that restrict competition. However, the maritime Consortia Block Exemption Regulation allows, under certain conditions, shipping lines with a combined market share of below 30% to enter into cooperation agreements to provide joint cargo transport services.

Where such consortia face sufficient competition, where they are not used to fix prices nor share the market, their users may benefit from improvements in productivity and service quality. They are therefore exempted from the prohibition of anticompetitive agreements in Article 101(1) of the Treaty on the Functioning of the European Union (TFEU).

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