Antitrust: Commission paves way for more competition in ship classification market by making IACS' commitments legally binding
The European Commission has adopted a decision that renders legally binding commitments offered by the International Association of Classification Societies (IACS) to address Commission concerns that IACS may have infringed Article 81 of the EC Treaty and Article 53 of the EEA Agreement, prohibiting restrictive business practices. The Commission's concerns related to the ship classification market, in particular that IACS might have prevented classification societies, which are not members of IACS, from joining IACS, from participating in IACS' technical working groups and from access to technical background documents. Such behaviour would have hindered the entry and development of classification societies, which were not members of IACS, in the ship classification market. To address these concerns, IACS proposed a series of commitments, including the establishment of qualitative membership criteria and guidance for their application, the possibility for non-IACS classification societies to participate in IACS' working groups and full access to IACS' technical resolutions and related background documents. The commitments were market tested by the Commission this summer (see IP/09/898). Today's decision is based on Article 9(1) of Council Regulation (EC) 1/2003 on the implementation of the EC Treaty's antitrust rules. It ends the Commission's investigation and does not conclude whether there has been or still is an infringement of the antitrust rules. However, if IACS were to break its commitments, the Commission could impose a fine of up to 10% of IACS' total turnover without having to prove any violation of the EC Treaty's and the EEA Agreement's competition rules.
Competition Commissioner Neelie Kroes commented: "This decision opens up the ship classification market to the benefit of both classification societies which are not members of IACS and customers of ship classification services. This paves the way for more competition in this market, which should generate lower prices, more customer choice and improved quality of service."
The Commission carried out unannounced inspections in the ship classification market in January 2008 (see MEMO/08/65). In the course of its investigation, the Commission came to the preliminary view that IACS may have reduced the level of competition in the ship classification market, notably by preventing classification societies which are not already members of IACS from joining IACS, from participation in IACS' technical working groups (which develop IACS' technical resolutions that lay down requirements and interpretations to be incorporated into the classification rules and procedures of individual classification societies) and from access to technical background documents relating to IACS' technical resolutions.
To address the Commission's competition concerns, IACS offered the following commitments:
- To set up objective and transparent membership criteria and to apply them in a uniform and non-discriminatory manner. The commitments foresee detailed rules, including clear deadlines, for the different steps of the membership application, suspension and withdrawal procedure.
- To ensure that classification societies which are not members of IACS will nonetheless be able to participate in IACS' technical working groups.
- To put all current and future IACS resolutions and their related technical background documents into the public domain at the same time and in the same way as they are made available to IACS members.
- To set up an independent appeal board to settle possible disputes about access to, suspension or withdrawal of membership of IACS, participation in IACS' technical working groups and access to IACS' resolutions and to their technical background documents.
On 10 June 2009, the Commission launched consultation for interested parties to give their views on the commitments proposed by IACS (see IP/09/898). The results of this market test have confirmed that the proposed commitments are appropriate and proportionate to remedy the concerns.
Classification societies establish, apply and certify compliance with technical requirements relating to the design, construction, equipment, maintenance and survey of ships, which are laid down in their classification rules and procedures. More than 90% of the world's cargo carrying tonnage is covered by the classification rules and procedures set by the current ten members and one associate of IACS which are the largest classification societies in the world.
The full non-confidential version of the Commission decision under Article 9(1) of Council Regulation (EC) 1/2003, including the full text of the commitments, in the English authentic language will soon be available at: http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39416