EU Extends Liner Shipping Consortia Exemption

By Eric Haun
Friday, June 27, 2014

European  Commission extends validity of special competition regime for liner shipping consortia until April 2020

The European Commission has extended by another five years until April 2020 the validity of the existing legal framework exempting, if certain conditions are met, liner shipping consortia from EU antitrust rules. After a public consultation, the commission concluded that the exemption has worked well, providing legal certainty to agreements which bring benefits to customers and do not unduly distort competition, and that current market circumstances warrant a prolongation.

The maritime consortia block exemption regulation allows shipping lines with a combined market share of below 30% to enter into cooperation agreements to provide joint cargo transport services (so-called "consortia"). Such agreements usually allow liner shipping carriers to rationalize their activities and achieve economies of scale. If consortia face sufficient competition and are not used to fix prices or share the market, users of services provided by consortia are usually able to benefit from improvements in productivity and service quality. The commission has therefore exempted such agreements from the prohibition of anticompetitive agreements in Article 101 of the Treaty on the Functioning of the European Union (TFEU).

The first consortia block exemption regulation was adopted in 1995 and prolonged several times. The latest market investigation, conducted in 2013, showed that the main tenets of the commission's approach are still valid. This has been confirmed by a public consultation early 2014.

The extension of the exemption until April 2020 will provide legal certainty to liner shipping companies as regards the compatibility of their agreements with EU competition rules.

For consortia and alliances exceeding the market share threshold established in the block exemption regulation, it is the responsibility of the companies themselves to make sure that their agreements comply with Article 101 TFEU, and the commission can decide to intervene if necessary. The commission will continue to closely monitor market developments and the conduct of companies to ensure that markets remain open and competitive. In particular, in the context of the recent developments in the sector, the commission will remain vigilant as regards any risks for competition that may arise from the implementation of maritime consortia and might intervene if necessary.

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