Antitrust: Commission prolongs and amends block exemption for liner shipping consortia
European Commission - IP/05/477 25/04/2005
Brussels, 25th April 2005
The European Commission has renewed until 25th April 2010 a block exemption allowing shipping companies to enter into consortium agreements covering the maritime transport of cargo to or from one or more EU ports. The block exemption, first adopted in 1995 and previously renewed in 2000, automatically covers liner shipping consortia which have a market share of below 30% (or 35% if operated outside a so-called liner conference). The Commission has also introduced some minor amendments, following consultations with Member States and interested parties. Under the Commission Regulation, all agreements (except those on price-fixing) whose objective is the joint operation of liner shipping services are exempted from the EC Treaty’s ban on restrictive business practices (Article 81) provided they fulfil the conditions and obligations set out in the Regulation. The exemption does not cover the transport of passengers.
A consortium is a grouping of shipping lines which co-operate to provide joint maritime cargo transport services. Such agreements usually allow shipping lines to rationalise their activities and achieve economies of scale, thus improving the productivity and quality of liner shipping services. Provided consortia are faced with sufficient competition, those advantages benefit exporting firms, the customers of shipping lines. Therefore the block exemption only automatically covers consortia which have a market share of below 30% on any market on which they operate (or 35% if operated outside a liner conference).
Consortia exceeding the market share limits would not necessarily be unlawful, but would have to be examined for compatibility with the competition rules on an individual basis.
The consortia block exemption is closely linked to the block exemption for liner shipping conferences (Council Regulation (EEC) No 4056/86). The Commission has recently launched a review of the competition regime governing liner shipping conferences (see IP/04/1213). Due to the close links between the two block exemptions, the Commission considered that it is neither necessary nor appropriate to introduce substantial modifications to the consortia block exemption before the end of the said review.
The amendments allow a consortium member the right to withdraw from a consortium agreement without financial penalty after an initial period of up to 24 months, an extension of 6 months compared to the current regime. In addition, this initial period now also applies where the parties to an existing agreement have agreed to make substantial new investment in the maritime transport services offered by the consortium. Such investment is considered substantial when it constitutes at least half of the total investment made by the consortium members. Finally, one of the basic conditions for the grant of exemption to a consortium, that is the existence of effective price competition within the consortium, has been amended: ‘Individual confidential contracts’ may now also be taken into consideration to demonstrate the existence of such competition.