On 12 November 2009 HFW hosted a seminar on "Shipping Pools: Challenges and Solutions", attended by over 40 industry participants and chaired by HFW Partners Alistair Mackie and Julian Pierce. The speakers included Paul Csiszár, Director at DG Competition of the European Commission, whose responsibilities include transport, and Adrian Majumdar, a Partner in RBB Economics and formerly Deputy Director of Economics at the UK's Office of Fair Trading.
Mr Csiszár emphasised that the Commission has an open door policy and welcomes the opportunity to discuss proposed arrangements with parties. Being relatively new to the transport sector, he was keen to understand the difficulties faced by shipping companies in current market conditions, including large scale lay-ups. He made clear that despite these desperate conditions, the Commission would not tolerate hardcore cartels and that participants would be penalised severely. However, he also indicated that the Commission may be sympathetic to the need for other, less harmful forms of cooperation aimed at increasing efficiency.
Mr Majumdar covered assessment of market power, including competitive constraints, and exemption criteria such as efficiencies and indispensability.
Several lawyers from HFW also spoke. Head of EU/Competition, Partner Anthony Woolich, reviewed shipping pools from a competition law perspective. He identified the need to structure the pool as a joint production rather than a joint selling arrangement. Restrictions necessary to achieve that structure would be permitted. Key issues include market share and degree of integration. He reviewed full function joint ventures and commercial issues faced on conversion from a contractual structure. He analysed the Baltic Max Feeder Initiative being considered by the European Commission and the treatment of shipping pools in other major jurisdictions. He also suggested that the Commission should use the opportunity presented by its current review of agreements between competitors to clarify its present guidelines, including the factors indicating joint production rather than joint selling.
HFW's Andrew Johnstone reviewed alternative structures for shipping pools, such as corporate structures, limited liability partnerships, protected cell companies and incorporated cell companies. Corporate Partner Mark Wandless identified key commercial points to be negotiated in pool agreements, including coefficients and commercial management.
The seminar included a lively Q and A panel session in which delegates questioned the speakers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.