Think-tank calls for end to EU liner consortia block exemption

Credit: Southern Cross Maritime
Credit: Southern Cross Maritime

The International Transport Forum (ITF), an inter-governmental think-tank managed by the OECD, has recommended the European Commission to consider dropping the Consortia Block Exemption Regulation when it expires in April 2020.

The regulation gives liner shipping consortia with a market share of less than 30% exemption from the general EU ban on agreements between companies that restrict competition between them.

The exemption has long been controversial, notably among shippers, and the ITF recommendation comes at a time when the European Commission itself is engaged in a consultation process with concerned parties prior to deciding whether the exemption should be maintained beyond April 2020 or not.

The ITF argues emphatically that it should not. In a report entitled “The Impact of Alliances in Container Shipping”, it said that there was no justification for treating shipping companies any differently from other companies from a competition standpoint.

“Liner shipping does not have unique characteristics that justify exemptions from competition law, either for conferences or for alliances,” it said. “In line with the global long-term trend to dismantle sector-specific exemptions from competition law and in line with OECD regulatory principles, generic antitrust rules should apply to all agreements between liner shipping companies, as for any other industry, with regard to the co-operation that is allowed.”

Liner shipping ‘conferences’, which enable member shipping companies to set freight rates in specific trades, were excluded from the EU block exemption in October 2008 but the exemption has remained available to the more loosely organised consortia which currently dominate the liner shipping sector.

The ITF said in its report that those countries that still allowed conferences to operate should reconsider their position but that the EU should also review its position regarding the exemption it still made available to consortia.

The organisation did not argue that exemptions should be banned altogether, however.

“A repeal of block exemptions is unlikely to result in the termination of current and future alliances, as these could still be authorised under competition law on a case-by-case basis,” it said. “However, it would ensure greater scrutiny of individual alliances and thus more effectively deter any anticompetitive conduct in the sector.”

It added that, to ensure that legal certainty was preserved in the absence of the EU block exemption, the commission could provide temporary guidelines to indicate how liner shipping should be dealt with under EU competition law.

The ITF took account of the possibility that the commission could opt to maintain the block exemption, however. If such were the case, it said, the scope of the exemption should be limited, notably via a provision that shippers and other transport users should be consulted about the creation of alliances and by the exclusion from the scope of the exemption of joint purchasing of port and other services by alliances.

Concerned parties can submit their views on the EU consortia block exemption regulation to the European Commission until 20 December.