After a process lasting more than five years the European Commission announced today it has closed its investigation into antitrust pricing allegations against 14 container lines trading between Asia and Europe.
To mitigate the EC’s concerns over so-called ‘price signalling’ by the carriers on the tradelane, a deal has been struck that will see the container lines “stop publishing and communicating GRI (general rate increase) announcements”.
Instead, if they so choose, the carriers will publish all-inclusive maximum freight rates for the route – however, these must not be made more than 31 days before the implementation date.
The shipping lines will be bound by these FAK (freight all kinds) rates as maximum prices during the validity period, but will, nonetheless, still be able to quote lower rates.
“We are very pleased that the EC has closed the case without finding an infringement of EU competition law,” said Camilla Jain Holtse, chief legal counsel on competition compliance at Maersk Line. “We and the other shipping companies have throughout declared that we have not engaged in any practices that contravene EU competition law.”
The investigation began on 17 May 2011, when commission officials carried out unannounced “dawn raids” on the premises of carriers in several member states.
On 21 November 2013, the EC opened formal antitrust proceedings against the carriers.
It claimed: “Since 2009, these companies have been making regular public announcements of price increase intentions through press releases on their websites and in the specialised trade press. These announcements are made several times a year and contain the amount of increase and the date of implementation.”
The commission said it had concerns that the GRI practice might allow the shipping companies to “signal future price intentions to each other” and thereby harm competition and shippers, in breach of antitrust regulations.
On 16 February this year, the EC announced it had received commitments from all of the container lines on price announcements. They were offered without admission of infringement or liability, but were conditional on the commission not taking enforcement action.
This”deal” was then put out to consultation, with an invitation to interested third parties to submit observations on the commitments.
Following today’s agreement, the carriers will be breathing huge sighs of relief, as infringement of antitrust laws could have led to massive fines being levied on an industry struggling to break even.
According to sources, the EC was unable to prove that the GRI mechanism had worked in favour of the carriers, not least as, despite the alleged signalling of increases, freight rates remained sub-economic for much of the duration of the investigation, with the industry collectively failing to make a profit in all but one of the past five years.
Hapag-Lloyd discontinued the GRI system in May, reverting to announcing FAK rates on the Asia-Europe route, a practice more recently followed by Maersk Line.
After today’s announcement, the other carriers on the tradelane will be obliged to follow suite.