A DISCUSSION paper on class exemptions from competition laws has been released by the Australian Competition and Consumer Commission.

Liners providing cargo shipping services to or from Australia have broad exemptions from competition laws.

Part X of the Competition and Consumer Act permits liner shipping operators to enter into agreements with each other in areas such as freight rates, the vessels to be used, and the quantity and kinds of cargo carried.

Part X allows operators to make these agreements without risk of breaching competition laws.

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The 2015 Harper Review of competition law found liner shipping industry exemptions under Part X, introduced during the 1960s, are outdated and should be repealed.

The Harper Review recommended the ACCC develop a class exemption for liner shipping agreements.

“Australia’s Part X regime is one of the most permissive of its kind among developed countries, several of which have recently moved to scale back their own competition exemptions for liner shipping,” ACCC chair Rod Sims said.

“These sorts of exemptions have become harder to justify, as cargo ships have become bigger and the industry has consolidated,” he said.

ACCC chairman Rod Sims. Photo: ACCC

“We recognise, however, that some limited co-ordination between liners visiting Australia may be in the public interest, by supporting efficient shipping services.”

Mr Sims said ACCC ‘authorisation’ and ‘notification’ processes allowed businesses to seek legal protection for arrangements that risked breaching competition law.

However, unlike with the authorisation and notification processes, a class exemption applies automatically, without the ACCC reviewing specific agreements.

“We are also keen to hear from the industry about whether the class exemption should extend to collective bargaining by cargo owners and their representatives,” Mr Sims said.

Submissions can be provided to the ACCC until 28 February 2020.

Shipping Australia CEO Rod Nairn said they had been in regular contact with the ACCC for the past two years in preparation for this discussion paper. 

“We see the opportunity to develop a block exemption as a positive step for liner shipping,” Mr Nairn said.

“In order to provide efficient and frequent international shipping services lines need to cooperate to provide combined services. A block exemption is a low regulatory impact way to allow this to happen.”

Mr Nairn said there were some other requirements for shipping that are currently allowed under the existing Part X of the CCA which might be difficult to cover in a block exemption.

“We will need to make provisions for these types of services if the block exemption is expected to replace Part X,” he said.

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