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Thursday, September 29, 2016

Precisely Why China Pulled the Plug on P3

July 2, 2014

Full load container ship: File photo

Full load container ship: File photo

The proposed container ship P3 alliance between the 255-ship fleets of Maersk, Mediterranean Shipping Company S.A. and CMA CGM was turned down by China's Anti-monopoly Bureau at the Ministry of Commerce, because the P3 alliance intended to set up a joint operations centre unlike other traditional shipping alliances. Clarification on the Ministry's website is as follows:

"On June 17, 2014, Ministry of Commerce announced its disapproval after the anti-monopoly investigation in the concentration of undertakings of Maersk, Mediterranean Shipping Company S.A. and CMA CGM establishing an 'Internet' [online operations] center.

The large-scale collaboration of the three largest shipping companies in the world will bring profound influence to global shipping industry, and attract high attention from all circles. A leading official of Anti-monopoly Bureau of Ministry of Commerce made an explanation about the case.

The official said Ministry of Commerce has no objection to enterprises gaining advantageous market position through its competitiveness. For those enterprises who have already possessed certain market prowess and want to further strengthen the forces and achieve dominant market position through the concentration of undertakings, the impact on market competition should be analyzed seriously. After assessment of related market share, market control, market access and industrial features, Ministry of Commerce believes that after the concentration, the three companies will form a tight combination, and their share of transport capacity of Asia-Europe container liner transportation will reach 47%, with remarkable increase of market concentration. 



The official said that during the investigation, Ministry of Commerce stated to the declarer that the concentration of undertakings may have the impact of competition elimination and restriction, and had several consultations on how to reduce the adverse impact of the concentration of undertakings to competition. The declarer submitted several remedy plans. After evaluation, Ministry of Commerce considered that there were no legal basis and convincing evidence to support the remedy plans, and it cannot be proved that the concentration of undertakings has more positive effect than adverse effect or accord with public interests. Therefore, according to the Anti-monopoly Law of People’s Republic of China, Ministry of Commerce decided to forbid this concentration of undertakings. 



The official stressed that Ministry of commerce will continue to focus on the concentration of undertakings in shipping market, work together with related governmental departments, maintain market competition order, and protect the interests of consumers according to law. 



[Background]
On September 18, 2013, Ministry of Commerce received the declaration of concentration of undertakings of Maersk, Mediterranean Shipping Company S.A. and CMA CGM establishing an Internet center. After examination, Ministry of Commerce considered that the declaration documents are lack of materials, and required the declarers to supplement.

On December 19, 2013, Ministry of Commerce confirmed that the supplementary documents met the requirements of Article 23 of Anti-monopoly Law, and began initial investigation in the concentration of undertakings. On January 18, 2014, Ministry of Commerce decided to conduct further investigation. On April 18, 2014, Ministry of Commerce made a decision to extend the investigation, with a deadline on June 17, 2014."

Source: Ministry of Commerce Website



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