European Commission announces expiry of antitrust block exemption for liner shipping consortia (see here)

 On 10 October 2023, the Commission announced the forthcoming expiry of the Consortia Block Exemption Regulation (CBER) for liner shipping (Commission Regulation (EC) No 906/2009 of 28 September 2009 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies).

Background. Liner shipping is the provision of regular maritime freight transport (primarily by container) between ports on a particular route. The supply chain crisis that followed the COVID-19 outbreak spotlighted the significant role played by the sector in trade and globalization. In 2020, maritime transport carried some 70% of the value of international trade, of which some two-thirds was carried by containers.

The Commission notes that liner shipping services require significant levels of investment. Therefore, such services are regularly provided by several shipping companies (i.e., carriers) cooperating in consortia, which can lead to economies of scale and benefit users of the shipping services (i.e., shippers and freight forwarders) through improved coverage of ports and better services.

The CBER thereby exempted liner shipping consortia from EU antitrust rules under certain conditions, among which that customers shall enjoy a fair share of the resulting benefits.

Expiry of CBER. In deciding against prolonging the CBER, the Commission considered that it no longer furthered competition in the shipping sector. In this respect, Commissioner Didier Reynders, responsible for Competition, contended that the CBER's expiry reflected that the key sector of shipping services had undergone "significant structural changes" (e.g. carrier consolidation, global alliances, vertical integration). According to Commissioner Reynders, these changes resulted in "new market conditions, which became apparent during the coronavirus pandemic. Our evaluation has shown that a dedicated block exemption for shipping lines is no longer adapted to those new market conditions." (emphasis added)

The Commission's decision followed a review process launched in August 2022, which gathered evidence from stakeholders, including the most interested parties in the maritime liner shipping supply chain (carriers, shippers and freight forwarders, as well as ports and terminal operators) on the impact of consortia between liner shipping companies and the CBER on their operations. The Commission published the results of the review process in a Staff Working Document of 10 October 2023. 

Overall, the Commission viewed evidence collected from stakeholders as reflecting the CBER's "low or limited effectiveness and efficiency" during the 2020-2023 period. In particular, while the COVID-19 pandemic revealed the need to enhance the resilience of EU supply chains, the Commission asserted that the CBER's exceptional antitrust regime for shipping lines appeared to have led to fractures between the different categories of stakeholders (both on the sea and land sides), to the detriment of arrangements that would better accommodate the interests of all.

The Staff Working Document, in particular, reported that during the height of the COVID-19 crisis, certain shippers called for the CBER's immediate repeal, arguing that the regime created the impression that they were treated unfairly and that the maritime sector lacked a level playing field.

The Commission Q&A provides further details on the decision on the CBER's expiry.

Looking ahead. While the CBER will expire on 25 April 2024, the Commission stressed that cooperation between shipping lines will not become unlawful under EU antitrust rules. Rather, carriers operating to or from the EU will self-assess the compatibility of their co-operation agreements on shipping lines under EU antitrust rules, based on the extensive guidance provided in the new Horizontal Block Exemption Regulation and Specialisation Block Exemption Regulation (HBERs), adopted in June 2023, which apply to all economic sectors.

The UK is also currently reviewing the renewal of the CBER, which the UK had retained under its laws subsequent to the UK's withdrawal from the EU (also due to expire on 25 April 2024). Global shipowners are reportedly urging the UK to continue the CBER regime, arguing in particular that this facilitates the creation and operation of consortia by significantly reducing compliance burdens for carriers and by providing sector-specific legal certainty.

The UK Competition and Markets Authority (CMA) initiated a consultation in January 2023 on renewing the CBER, which indicated that it "provisionally considers that the current retained CBER regime has proven to be appropriate and fit for purpose. The CMA therefore does not consider that major changes to the existing regulation is warranted." (emphasis added) The CMA is reportedly now considering consultation responses before making a final recommendation to the UK Secretary of State by end-2023.

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