End of the oligopolistic era nigh?
The EU Commission, having spent a year evaluating the special anti-trust conditions for shipowners, has now decided to let them expire on 25 April 2024. Even though the commission hasn’t identified a lack of competition, or shipowners dominating the supply chain in the maritime markets, the discontinuation is coming and is likely to represent an incentive for third parties worldwide.
In all the discussions of this matter just don’t forget that for decades shipowners had to keep their prices so low that only consolidation managed to maintain a market. In addition they have enjoyed exemption from EU anti-trust rules, under certain conditions, since 2009.
Both in 2014 and 2019 the European Commission extended the duration of the applicable legal framework for five years. The last continuation expires on 24 April 2024 – and there’ll be no further extension from the EU.
Many unsuccessful objections
Although the major carriers have had several boom years recently, the bulwark of the European Union’s ‘consortia block exemption regulations’ (CBER) seemed unshakable for a long time. As recently as May 2022 high-ranking anti-trust experts from Africa, China, the EU and the USA, speaking at a panel organised in Geneva by Fiata, under the aegis of its senior vice-president Jens Roemer, saw no need for urgent action. Both Rebecca Dye of the USA’s Federal Maritime Commission (FMC) and Henrik Mørch of the EU’s DG Comp ascertained “sufficient competition in the market.” They expressed their willingness to carry out some checks, at most (see ITJ Daily of 1 June 2022).
Now a series of united appeals, including one in October 2022 by the ten associations Clecat, EBU, ESC, Espo, ETA, Feport, Fiata, GSF, Fidi and UIRR, have had an effect. A market study by the EU brought matters to light. Although the boom years 2020 to 2022 were neither historically representative nor caused by consortia’s rights, they contributed to a deterioration in the quality of services, a sharp increase in freight costs and a distortion of competition between the players in the global supply chain, according to 24 of the 33 shippers and freight forwarders surveyed. The vertical integration of overland freight forwarding activities into carriers’ portfolios was one of the reasons for the EU’s decision.
Making waves worldwide
The decision has already made waves outside the European Union. In the United Kingdom, for example, Steve Parker, the director general of the British International Freight Association (Bifa), called on the country’s Competition and Markets Authority (CMA) to “follow the European Union’s example and not maintain the UK’s equivalent of a block exemption scheme for shipping lines.”
It still remains unclear to market observers whether the Federal Maritime Commission will follow the European path or not.