October 13, 2004
EU likely to end liner conference competition rule immunity
The European Commission has adopted a White Paper on liner shipping conferences that "considers repealing the generous exemption from competition rules which has benefited the sector for almost 20 years."
Interested parties can comment on the subject and on possible alternatives before December 15.
Commenting on the White Paper, Commissioner for Competition Mario Monti said "Shipping companies have enjoyed a very generous exemption from competition rules for very long. Like other competition authorities we believe that this exemption was justified at some point but must now be reexamined. bearing in mind its impact for the competitiveness of the European industry and for exporting companies in particular."
He added: "I'm encouraged by the shipping companies' present constructive attitude and I call on them to think of other forms of co-operation that meet their interests and those of the European manufacturing industry and other customers."
Shipping companies have traditionally organized themselves as liner conferences that would agree common or uniform freight rate in order to provide regular scheduled maritime transportation services.
Liner shipping conferences have historically been granted some form of exemption or immunity from the competition rules in many jurisdictions.
In the European Union, the Council of Ministers agreed rules, in 1986, that exempt price-fixing, capacity-regulation, under certain strict conditions, and other agreements or consultations between liner shipping companies from 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.
This immunity has since been subject to review in several parts of the world, including at the Organization for Economic Co-operation and Development.
The White Paper is the second step in the EU review and should culminate with concrete legislative proposals in 2005. It analyzes whether to maintain, modify or repeal the current regulation and, particularly, whether to replace the present so-called block exemption with other instruments such as, for instance, a set of guidelines (in addition to already existing forms of cooperation such as consortia and alliances).
During its review, the Commission says it "will continue to bear in mind that liner shipping is a global industry that is also of crucial importance for world trade since 75 percent in volume terms (45 percent in value terms) of exports and imports are carried out by sea."
The Commission says review must be seen in the context of the conclusions of the Lisbon European Council in 2000 which called on the Commission "to speed up liberalization in areas such as gas, electricity, postal services and transport."
The review is also inspired by an OECD secretariat's report that recommended removing anti-trust exemption for price fixing and rate discussions.
The White Paper can be found at the following website address: