MSC OSCAR at APM Terminals Rotterdam

The liner shipping industry’s block exemption from EU competition law has come under renewed attack from the sector’s customers and suppliers.

A joint submission from freight forwarding association CLECAT, port operator group FEPORT, rail group UIRR, barge operators’ association EBU and shipper representatives Global Shippers Forum and European Shippers Council calls on the EC to reconsider extending the Block Exemption Regulation (BER) until April 2024.

“Not only has the commission largely dismissed the views of users, operators and service providers in the supply chain, the associations all share the view that there are many legal flaws in the arguments put forward by the commission,” it says.

“These flaws relate to many issues – missing data, one-sided assumptions on efficiency gains disregarding non-rate related parameters, a lack of a proper definition of relevant geographic markets to assess market shares and a complete failure to identify remaining benefits to users if the BER is continued.”

The group added that they would be requesting a meeting with EC competition commissioner Margrethe Vestager.

“The signing associations, which are exploring all possible legal options, believe that it is the role of the EC to guarantee a true level playing field and a healthy functioning of the maritime logistics chain to the benefit of Europe’s consumers.

“In view of the importance of the BER review process, the associations are confident that commissioner Vestager [would] respond positively to a request for a meeting to address their concerns – as this opportunity has no doubt already been given to the carriers and their representatives.”

The group commissioned global law firm Dentons to undertake a legal analysis of the EC’s staff working document, which was published in November and indicates the EC’s intention to extend the BER.

The Dentons analysis concluded that the EC had failed to obtain relevant price and market share data since the exemption was last extended – one of the key points of the emption is that no shipping alliance should have a greater-than-30% market share.

“The commission concedes it is difficult to estimate the exact market shares of consortia, due to lack of accurate data on transported volumes and the complex network of cross-membership. This amounts to an admission that the terms of the BER is unenforceable as the commission cannot calculate precisely whether a consortium falls within the market share threshold,” it said.

And it also argued that the effects of the alliance system on shipping lines’ principal suppliers, port operators and hinterland transport providers, had also not been taken into account.

“The commission has not analysed the impact of liner shipping consortia on ports operations and landside transportation. The landscape of the liner shipping industry has changed, in the sense carriers do not limit their services to port-to-port services, but door-to-door; they also exchange data on services which relate to the port and landside which is made easier with developments in the area of big data and business intelligence and analytics – all of this not available to the liner shipping industry at the time of previous reviews of the BER,” it said.

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