The UK Competition and Markets Authority (CMA) has decided to let the Liner Shipping Consortia Block Exemption Regulation (CBER) expire on 25 April 2024.
ccording to the UK Government, the CMA has published its final decision that it will not recommend replacement of the CBER to the Secretary of State. The Competition Act 1998 prohibits agreements between businesses that restrict competition in the UK (unless they meet the conditions for exemption in section 9(1) of the Competition Act or are otherwise excluded). This is known as the Chapter I prohibition.
An agreement is exempt from the Chapter I prohibition if it creates sufficient efficiencies and benefits to outweigh any anti-competitive effects. A ‘block exemption’ automatically exempts agreements of a certain category from the Chapter I prohibition if the agreement satisfies the conditions set out in the block exemption. In this way, a ‘block exemption’ provides legal certainty for businesses.
As part of the CMA’s consultation with the industry, it received feedback from some customers of liner shipping companies that they are not seeing the benefits from companies participating in consortia, including concerns about charges and service quality.
It may be the case that particular consortia can be justified when looked at individually, and allowed under competition law. But the CMA’s view is that they should not benefit from the automatic exemption, which a block exemption offers. The CMA has therefore decided not to recommend a new block exemption to replace the existing CBER.
In reaching this decision, the CMA has also taken into account 2 additional factors:
- First, many liner shipping companies already have to self-assess their consortia because their combined market share exceeds the thresholds allowed under the block exemption.
- Secondly, liner shipping services to the UK currently call at ports in the EU as part of the same overall service. Liners operating these services will also need to consider compliance with EU competition law, following the EU’s decision to let its own block exemption lapse, alongside needing to consider compliance with UK competition law. Given that no automatic exemption will apply in the EU, the value of an automatic exemption under UK law is therefore significantly reduced.
The Liner Shipping Consortia Block Exemption Regulation (CBER) was introduced by the European Commission in 2009. It was retained into UK law at the end of 2020, when the UK left the EU, and is due to expire in April 2024.
To remind, the European Commission has also decided not to extend the EU legal framework which exempts liner shipping consortia from EU antitrust rules (Consortia Block Exemption Regulation CBER). The Commission has concluded that the CBER no longer promotes competition in the shipping sector and therefore it will let it expire on 25 April 2024.