China torpedoes P3 alliance plans

Maersk CEO Nils S. Andersen: "The decision does come as a surprise to us" Maersk CEO Nils S. Andersen: "The decision does come as a surprise to us"

JUNE 17, 2014 — China's Ministry of Commerce said today that it would not approve plans for the P3 operational vessel sharing network that containership operators MSC, CMA CGM and Maersk Line had proposed.

Announcing its decision, the Ministry of Commerce said that the alliance, involving a large-scale cooperation of the three largest shipping companies, would have a profound impact on the global shipping industry, and that its analysis of the case related to market share, market power, market entry, industry characteristics and other factors. It said that the alliance would control 47% of the Asia-to-Europe container shipping market. The parties had "failed to demonstrate that the alliance would bring more benefit than harm or that it is in line with the public interest." Accordingly, the Ministry decided to ban the alliance under the People's Republic of China Anti-Monopoly Law.

The P3 alliance had earlier received approvals from both the U.S. Federal Maritime Commission and the European Commission and was scheduled to start operations in the autumn of 2014.

The Chinese decision appears to have surprised the P3 partners.

"The P3 partners take note of and respect MOFCOM's decision. Subsequently, the partners have agreed to stop the preparatory work on the P3 Network and the P3 Network as initially planned will not come into existence," they said today

"In Maersk Line we have worked hard to address the Chinese questions and concerns. So of course it is a disappointment. P3 would have provided Maersk Line with a more efficient network and our customers with a better product. We are committed to continuing to be cost competitive and offer reliable services," said Vincent Clerc, Chief Trade and Marketing Officer, Maersk Line.

"The decision does come as a surprise to us, of course, as the partners have worked hard to address all the regulators' concerns. The P3 alliance would have enabled Maersk Line to make further reductions in cost and CO2 emissions and not least improve its services to its customers with a more efficient vessel network. Nevertheless, I'm quite confident Maersk Line will accomplish those improvements anyway. It has delivered on those improvements over the last five quarters in the absence of P3 and I'm confident it will continue to do so," said Group CEO Nils S. Andersen.

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