The European Commission is inviting comments from interested parties on commitments offered by fifteen container liner shipping companies to address concerns relating to concerted practices.The Commission has concerns that container liner shipping companies’ practice of publishing their future price increase intentions may harm competition and customers by raising prices for their services to and from Europe, in breach of EU antitrust rules.
Container liner shipping is the transport of containers by ship at a fixed time schedule on a specific route between a range of ports at one end (e.g. Shanghai – Hong Kong – Singapore) and another range of ports at the other end (e.g. Rotterdam – Hamburg – Southampton). Container shipping accounts for the vast majority of non-bulk freight carried by sea.
Fifteen container liner shipping companies (“carriers”) have regularly announced their intended future increases of freight prices on their websites, via the press, or in other ways. The carriers are China Shipping (China), CMA CGM (France), COSCO (China), Evergreen (Taiwan), Hamburg Süd (Germany), Hanjin (South Korea), Hapag Lloyd (Germany), HMM (South Korea), Maersk (Denmark), MOL (Japan), MSC (Switzerland), NYK (Japan), OOCL (Hong Kong), UASC (UAE) and ZIM (Israel).
These price announcements, known as General Rate Increases or GRI announcements, do not indicate the fixed final price for the service concerned, but only the amount of the increase in US-Dollars per transported container unit (twenty-foot equivalent unit, “TEU”), the affected trade route and the planned date of implementation. They generally concern sizable increases of several hundred US Dollars per TEU.
General Rate Increase announcements are made typically 3 to 5 weeks before their intended implementation date, and during that time some or all of the other carriers announce similar intended rate increases for the same or similar route and same or similar implementation date. Announced General Rate Increases have sometimes been postponed or modified by some carriers, possibly aligning them with the General Rate Increases announced by other carriers.
The Commission has concerns that General Rate Increase announcements may not provide full information on new prices to customers but merely allow carriers to explore each other’s pricing intentions and coordinate their behaviour. Such conduct would breach EU and European Economic Area (EEA) competition rules’ ban on concerted practices between companies (Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEA Agreement).
Proposed commitments
In order to address the Commission’s concerns, the carriers offered the following commitments:
- the carriers will stop publishing and communicating General Rate Increase announcements, i.e. changes to prices expressed solely as an amount or percentage of the change;
- in order for customers to be able to understand and rely on price announcements, the price figures that the carriers announce will benefit from further transparency and include at least the five main elements of the total price (base rate, bunker charges, security charges, terminal handling charges and peak season charges if applicable);
- any such future announcements will be binding on the carriers as maximum prices for the announced period of validity (but carriers will remain free to offer prices below these ceilings);
- price announcements will not be made more than 31 days before their entry into force, which is usually when customers start booking in significant volumes and
- the commitments proposed by the parties include two exceptions in situations that would be unlikely to give rise to competition concerns. Namely, the commitments will not apply to: (i) communications with purchasers who on that date have an existing rate agreement in force on the route to which the communication refers and (ii) communications during bilateral negotiations or communications tailored to the needs of specific identified purchasers.
Source: europa.eu
