Since the Liner Conferences Block Exemption expired on 18 October 2008, Regulation 823/2000, the Consortia Block Exemption has been the only block exemption regulation applicable to the transport sector, and it will expire in April 2010. In an effort to update the Consortia Block Exemption in the light of the latest market developments, the European Commission adopted a new liner shipping consortia block exemption – the Revised Block Exemption – on 29 September 2009. It will come into force on 26 April 2010.
The Revised Block Exemption is very similar to the Consortia Block Exemption in that it applies to international liner shipping services for the carriage of cargo, excluding maritime cabotage.
More types of services are covered by the definition of consortia in the Revised Block Exemption, as references to services being carried out chiefly by container have been removed. This means that certain niche services such as reefers may be covered by the Revised Block Exemption if they are liner services. In addition, "interrelated agreements" such as reciprocal slot charters are now expressly covered.
One of the main changes is that the Revised Block Exemption reduces the market share threshold from 35% to 30%, to bring it in line with the market shares imposed by block exemptions in other sectors. This is also to ensure that unlawful vertical restraints do not occur. The Commission makes it clear that the market shares should be based on market reality. In particular, the activities of carriers within and outside the consortium in the same relevant market will have to be carefully examined when deciding whether to aggregate market shares or not.
The list of activities which are exempted has now been narrowed down. Activities of a consortium operating within a conference are no longer automatically exempted. Similarly, cargo, revenue or net revenue pools, joint marketing activities (although these may be allowed as ancillary activities) and joint documentation systems are no longer covered by the block exemption.
The main remaining exempted activities are:
- Joint operation of liner shipping transport services
- Capacity adjustments in response to fluctuations in supply and demand, only if capacity adjustments within consortia are limited to what is indispensable
- Joint operation or use of port terminals and related services
- Any other ancillary activity which is necessary for the implementation of the other permitted activities
The revised block exemption will not apply to certain hard core restrictions, such as agreements which have as their object:
- Price fixing when selling liner services
- Limitation of capacity or sales except for the permitted capacity adjustments
- Market or customers allocation
The conditions for exemption, such as the need for consortium members to be subject to effective competition from carriers which are not members of the consortium, have been relaxed as they were not considered as necessary in light of the market thresholds imposed in the Revised Block Exemption.
The exit clauses and lock-in periods, in case a member wants to withdraw from the consortium, have been prolonged.
It is worth noting that the Revised Block Exemption makes it clear that the benefit of the block exemption can be withdrawn where links between consortia and/or their members have a negative effect on competition.
The Revised Block Exemption will have a duration of five years.
Under the Revised Block Exemption, all consortia agreements (except in particular those on price fixing) whose objective is the joint operation of liner shipping services are exempted from the EC Treaty's prohibition on restrictive business practices provided they fulfil the conditions and obligations set out in the Regulation.
The rules allow consortium members to make joint reductions of capacity in response to cyclical changes in the market but outside liner consortia the general rule is still that joint capacity cuts are hardcore restrictions of competition and attract heavy fines.
The European Commission's press release draws attention to the fact that the market share limit for benefiting from block exemption will be lowered from 35% to 30% and existing consortia have until next April to check their figures and consider what action to take if the new level is exceeded.
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