Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC accepts container liner shipping companies’ commitments on price transparency, (Jul 7, 2016)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has accepted commitments from 14 container liner shipping companies intended to increase price transparency for customers and to reduce the likelihood of coordinating prices. According to the agency’s announcement, the commitments address concerns that the companies' practice of publishing their intentions on future price increases may have harmed competition and customers and may have raised prices on the market for container liner shipping services on routes to and from Europe, in breach of European Union (EU) antitrust rules.

Container liner shipping is the transport of containers by ship according to a fixed time schedule on a specific route between a range of ports at one end and another range of ports at the other end. More than half of EU imports and exports are carried by sea, of which around 40 percent is shipped in containers.

Since 2009, these companies have been making regular public announcements of price increase intentions through press releases on their websites and in the specialized trade press. The carriers are 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 announcements, known as General Rate Increases (GRIs), are made several times a year and contain the amount of increase and the date of implementation, which is generally similar for all announcing companies. The announcements are usually made by the companies successively a few weeks before the announced implementation date.

The EC opened formal antitrust proceedings on its own initiative to investigate the practice of publishing GRI announcements in November 2013. The EC had concerns that GRI announcements did not provide full information on new prices to customers but merely allowed carriers to be aware of each other's pricing intentions and may make it possible for them to coordinate their behavior. The practice could lead to higher prices for container liner shipping services and harm competition and customers.

In order to address the EC's concerns, the carriers offered the following commitments: (1) the carriers will stop publishing and communicating GRI announcements; (2) in order for any future price announcements to be useful for customers, the carriers will announce figures that 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); (3) price announcements will be binding on the carriers as maximum prices for the announced period of validity; and (4) price announcements will not be made more than 31 days before their entry into force, which corresponds to the period when customers usually start booking in significant volumes.

"Container shipping accounts for the vast majority of the non-bulk freight carried by sea to and from Europe," said Margrethe Vestager, EC Commissioner in charge of competition policy. "Competitive shipping services are therefore essential for European companies and for the EU's economy as a whole. The commitments offered by 14 carriers will make prices for these services more transparent and increase competition."

Rail passenger transport sector inspections. In other news, the EC confirmed that on June 28 its officials carried out unannounced inspections in the sector of rail passenger transport in several Member States. The EC has concerns that the companies concerned may have entered into anti-competitive agreements aiming to shut out competing rail passenger transport operators from the market. Previously, the EC carried out unannounced inspections in November 2015 in the rail passenger transport sector in Austria. Unannounced inspections are a preliminary step in investigating suspected anti-competitive practices.

Companies: CMA CGM, S.A.; COSCO Holdings Company, Ltd.; Evergreen Group; Hamburg Süd Group; Hanjin Shipping Co. Ltd.; Hapag Lloyd; Hyundai Merchant Marine; Maersk Line; Mitsui O.S.K. Lines; Mediterranean Shipping Company; Nippon Yusen Kabushiki Kaisha; Orient Overseas Container Line; United Arab Shipping Company; Zim American Israeli Shipping Company

News: Antitrust