THE EUROPEAN Commission will not extend the EU legal framework that exempts liner shipping consortia from antitrust rules.
In a statement, the commission said the Consortia Block Exemption Regulation “no longer promotes competition in the shipping sector and therefore it will let it expire on 25 April 2024”.
The EC adopted the CBER in 2009 and extended it in 2014 and 2020.
The commission said the decision follows a review process that gathered evidence about the CBER’s functioning since 2020.
The CBER allows shipping lines to enter into co-operation agreements, and form consortia, for cargo transportation services, under certain circumstances.
In its statement, the commission said: “[Liner shipping services] require significant levels of investment and therefore are regularly provided by several shipping companies co-operating in consortia. 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”.
The commission said the expiry of the CBER does not mean that co-operation between shipping lines will become unlawful under EU anti-trust laws.
“Instead, carriers operating to or from the EU will assess the compatibility of their co-operation agreements with EU antitrust rules based on the extensive guidance provided in the Horizontal Block Exemption Regulation and Specialisation Block Exemption Regulation.”
Commissioner Didier Reynders, who is in charge of competition policy, on Tuesday said shipping services are crucial to European and world trade.
“This key sector has undergone significant structural changes, such as carriers’ consolidation, global alliances and vertical integration, resulting in new market conditions, which became apparent during the coronavirus pandemic,” Mr Reynders said.
“Our evaluation has shown that a dedicated block exemption for shipping lines is no longer adapted to those new market conditions. This is why we have decided not to extend the current framework and to let it expire on 25 April 2024.”
The European Commission launched its review in August 2022, calling for evidence and feedback from stakeholders on the CBER.
It also sent questionnaires to the most interested parties such as carriers, shippers, ports and terminal operators, asking about the impact of shipping line consortia, as well as the CBER on their operations.
“Overall, the evidence collected from stakeholders points towards the low or limited effectiveness and efficiency of the CBER throughout the 2020-2023 period,” according the EC’s statement.
It found that the regulation brings limited compliance cost savings to carriers and plays a secondary role in carriers’ decision to co-operate.
Also, over the evaluation period, the review found that the CBER was not enabling smaller carriers to co-operate among each other and offer services in competition with larger carriers.
World Shipping Council president and CEO John Butler said: “We appreciate the DG COMP’s recognition of the many benefits of vessel sharing to European industry and consumers, even if we disagree with the logic behind the recommendation to discontinue the CBER.
“The shift to general EU antitrust rules will create a period of uncertainty as carriers adjust to the new legal structure. Nevertheless, vessel sharing agreements will remain a fully legal and supported way for carriers to ensure efficient and sustainable transport for Europe.”
And in the UK, the British International Freight Association called on the UK government to follow the EC’s lead on consortia block exemption regulation.
BIFA director general Steve Parker said: “The sensible conclusion to the ongoing container market public consultation being conducted by the UK’s Competition and Markets Authority (CMA) would be to introduce an ombudsman to arbitrate on complaints as a minimum.
“Ideally it would follow the EC’s lead and not retain the equivalent of a block exemption regime for the liner shipping industry in the UK, when the current one expires in April 2024.”
The CMA announced the review in January this year.