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Commission starts consultation on application of competition rules to maritime transport

European Commission - IP/03/445   27/03/2003

Other available languages: FR DE DA ES NL IT SV PT FI EL

IP/03/445

Brussels, 27 March 2003

Commission starts consultation on application of competition rules to maritime transport

The European Commission is seeking comments from governments and the industries concerned regarding the application of the European Union competition rules to maritime transport. Shipping companies which are part of liner conferences currently benefit from antitrust immunity granted more than 15 years ago by the EU Council of Ministers. The Commission wants to ascertain whether this immunity, which allows companies to fix prices and limit supply, still produces the benefits expected and continues to be justified.

"Most of the world's trade is carried out by sea. It is, therefore, high time to examine whether the exceptionally generous antitrust immunity, which benefits shipping companies when they operate in liner conferences, is in line with today's market conditions. Most significantly, the Commission will want to see whether the Liner Conference Regulation results in reliable and efficient scheduled shipping services that meet the requirements of transport users, as was the legislator's initial aim", Competition Commissioner Mario Monti said.

Interested parties are invited to submit their views before 3 June 2003 on the Consultation Paper issued today by the Commission.

Liner conferences are groupings of shipping companies, which provide regular international transport services for cargo most significantly on routes between Europe, on the one hand, and North America and the Far East, on the other hand.

Origin of the exemption

In 1986, European Union Council of ministers agreed a regulation which exempts price-fixing, capacity-sharing and other agreements or consultations between liner shipping companies from EU competition rules (Articles 81 and 82). The justification for the Liner Conference Block Exemption Regulation 4056/86 was the assumption that the rate-setting and other activities of liner conferences lead to stable freight rates, which in turn assured shippers of reliable scheduled maritime transport services.

The review does not concern the Consortium Block Exemption Regulation 823/2000, which allows shipping lines to engage in operational co-operation (vessel-sharing, co-ordination of routes and schedules) but not to fix prices. The latter extended an exemption granted in 1995 until 2005 after it was found to be working well by both shipping lines and transport users.

The Liner Conference Regulation has never been reviewed despite the fact that it was adopted more than 15 years ago and that it is customary for the Commission to carry out periodic reviews into block Regulations which exempt certain categories of agreements from the general prohibition of restrictive practices and agreements. This is because Council Regulation 4056/86 unlike almost all other such exemptions remains in force for an unlimited period. The Commission will closely associate the Member States to this review exercise as only they can revoke or modify this Regulation.

Other jurisdictions revise policy

Three developments have also led support for a review. First of all, the modernisation of the general Regulation which lays down the rules and procedures to implement Art. 81and 82. Regulation 1/2003, which replaces Regulation 17/62, will come into force in May 2004 and now that the procedural review has been completed it seems appropriate to consider whether the substantive rules can also be modernised and simplified.

Secondly, in recent years the Union's major trading partners have also conducted reviews of their own liner shipping exemptions. The United States, for example, in 1998 adopted the Ocean Shipping Reform Act amending the US Shipping Act.

In a report of April 2002, the Organisation for Economic Co-operation and Development cast doubts on the general wisdom that collective rate setting was an indispensable pre-requisite for reliable liner shipping services and invited its Member countries to review the way in which competition rules were applied to the sector.

Thirdly, the growing trend towards container transport has also led to a re-organisation of the sector into consortia or alliances as the shipping companies tend to share out the costs of bigger vessels and to organise services differently.

Three-pronged approach

The Consultation Paper published by the Commission today identifies the issues that require examination in the light of current market conditions. For this purpose, it formulates a list of questions that go to the heart of the justification for the block exemption. It also invites comments on the need to simplify and modernise the Regulation in other substantive respects.

At this stage, therefore, the Commission does not put forward any firm policy options, nor does it carry out an in-depth market analysis.

The input gathered will enable the Commission to put forward, in a second stage, a series of policy options either in a Green or White Paper and to follow that up with legislative proposals, if considered necessary.

Note to editors

The Consultation Paper in all the EU official languages can be found at the following website address:

http://ec.europa.eu/competition/general_info/consultation.html


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