Australia: Can public price announcements be an invitation to collude? The EU's liner shipping investigation


On July 7, 2016, the European Commission (the Commission) closed its long-running investigation into potential anticompetitive practices in the container liner shipping sector after the companies under investigation offered to enter into binding commitments with the Commission regarding their future conduct. These commitments addressed the Commission's concerns that publication of future pricing intentions for identified routes allowed competitors to coordinate pricing behaviour.

This investigation has important implications for this sector as the way shipping lines can announce pricing intentions has now changed to become less flexible. The case also highlights the Commission's position that merely making price announcements can be construed as an invitation to collude - or "price signalling" – which can lead to illegal price coordination even without direct contact between competitors.

Cooperation: a necessary element of liner shipping

Cooperative arrangements have long been a feature in liner shipping – from liner conferences (i.e. arrangements between carriers enabling them to use common freight rates and agree capacity) to liner consortia (i.e. ship and capacity sharing agreements, and schedule coordination) – although regulatory approval of such cooperation has been subject to market share caps.1 Consortia arrangements have allowed the development of the current big four global liner alliances (2M, O3, G6, and CKYHE) without the need for fully-integrated mergers. However, while such alliances have allowed some stability in terms of liner capacity meeting global shipping demand, freight rates have continued to fluctuate wildly (see Fig 1), causing problems for certain lines – with the recent Hanjin insolvency a case in point.

Global container shipping volumes and average freight rates

Competition authorities have recognised the benefits of cooperation to ensure stability given the high fixed costs, large initial capital investments – and implications for global trade of disruption to shipping supply. However, the European Commission has been clear that competitors sharing strategic information, particularly intended future prices, is a serious breach of competition law.2

Under EU competition law rules, concerted practices which have as their object or effect the prevention, restriction or distortion of competition are unlawful – and this includes practices which reduce "strategic uncertainty", as these can reduce lines' incentives to compete against each other. However, there is a significant difference between lines communicating and coordinating intended price increases directly, and genuinely public price adjustment announcements intended to give customers notice of impending changes, e.g. through a newspaper. Public announcements will generally not constitute collusion, but what if there is evidence that the overriding intent in making these announcements was to "price signal" to competitors? If an announcement is followed by similar public announcements made by other competitors, could these be considered evidence of a collusive strategy? Is it illegal to follow the market leader on price? These questions were considered by the Commission in its investigation.3

The investigation

In May 2011, the Commission conducted unannounced inspections at the premises of companies active in the container liner shipping sector because it had reason to believe that there had been a breach of competition law rules.

On 22 November 2013, the Commission opened formal antitrust proceedings against the 14 liner shipping companies alleging that regular announcements of intended future price increases on their websites, via the press, and in other ways since 2009, were part of a collusive strategy.4 The price announcements, known as General Rate Increases or GRI announcements, did not indicate the fixed final price for the service concerned, but only the percentage or amount of USD increase per transported container unit (twenty-foot equivalent unit (TEU)), the affected trade route and the planned date of implementation. These announcements were made several times each year, typically around a month prior to implementation. The Commission alleged that other lines had announced similar intended rate increases for the same routes with similar implementation dates. Although lines were not bound by the announced increases, the concern was that the announcements allowed alignment of behaviour through advance awareness of each other's pricing intentions.

Outcome of the investigation

In its preliminary findings, the Commission indicated that the price announcements could constitute signalling which, by reducing the lines' level of uncertainty about competitor pricing behaviour, decreased incentives to compete. The Commission did not accept that the announcements were primarily for the benefit of customers because the announcements provided only partial information, and were not binding (meaning lines could subsequently adjust price in response to rivals' announcements). The Commission' s view was that the announcements were therefore too unreliable to be useful for customers, and harmful to the market as carriers would be able to adjust prices without the risk of losing customers. Overall, the Commission believed this was likely to lead to higher prices for liner shipping services.

To alleviate the Commission's concerns, the lines offered commitments for a period of three years, starting from 7 December 2016, to:

  1. stop announcing General Rate Increases by which price changes are communicated solely in percentage terms;
  2. instead, and in order to make price announcements more useful to customers, ensure that announcements regarding price 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. ensure that any future price announcements are binding as maximum prices for the announced period of validity (with lines remaining free to offer prices below these ceilings); and
  4. ensure that price announcements are not made more than 31 days before their entry into force (i.e. when customers typically start booking in significant volumes).


The commitments brought the investigation to a close, meaning the Commission was not required to formally conclude the price announcements had breached competition rules. Arguably, this is a good solution for both sides with the burden on the lines manageable, and the Commission avoiding lengthy legal challenges to an infringement decision that would have provoked considerable controversy. The 14 lines are now bound to comply with the commitments, and could face considerable penalties for breach of the commitments (up to a hypothetical maximum of 10% of global turnover), without the Commission needing to conduct further analysis. However, the limited three year duration of the commitments begs the question as to how the Commission would respond if historic practices are re-introduced thereafter. Does it have the appetite to take on the lines again on the illegality of public price announcements? The burden of proof for the Commission is high in such cases, but equally shipping lines – and others in the sector – will now think twice about their price announcement strategies for fear of investigation.


1 See Margrethe Vestager, the EU Competition Commissioner, speech in October 2015 industry trends
2 See the Horizontal Co-operation Guidelines 2011.
3 Case COMP/39850 Container Shipping
4 These were 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).

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions