EC SETS REVIEW OF ANTITRUST IMMUNITY FOR OCEAN CARRIERS

EC SETS REVIEW OF ANTITRUST IMMUNITY FOR OCEAN CARRIERS    A senior official of the European Commission’s competition directorate has outlined the schedule of the review of Europe’s conference antitrust law, Regulation No. 4056/86.
   “We are now launching a three-stage process to review that regulation,” Joos Stragier, head of the transport unit at the EC competition directorate, told the CI Shipping Forecast Conference in London.
   The review will start in the next few months, and is expected to take years, he said.
   Stragier said the first stage of the review will be a “technical working paper” that will establish the underlying questions concerning the conferences’ antitrust immunity. The technical paper will examine whether “there is any clear evidence that the antitrust immunity has led to stability,” he said. The technical paper will be published, and the EC will invite comments from the industry, asking for data.
   The second stage of the review will be a study of data gathered by the technical paper, and may involve analysis by industry consultants.
   If the EC concludes that there is a need to review the antitrust regulation, the Commission will move to the third stage of the review and make a proposal to change the regulation to European member governments.
   “It is far too early to predict what the contents (of the proposal) will be,” Stragier said.
   The EC official said that one option would be to introduce a regime similar to the U.S. Ocean Shipping Reform Act. Asked whether the EC may completely withdraw the immunity of conferences, Stragier answered: “You should not exclude any option.”
   It is time to review the antitrust regulation on conferences, introduced in Europe 16 years ago, and the review is a “major exercise” for the EC, Stragier said.
   He added that the recent report on competition in liner shipping compiled by the Paris-based Organization for Economic Cooperation and Development effectively questioned the basis of Regulation No. 4056/86.
   “Of particular interest for the European Union were of course the report’s conclusions concerning the relationship between exemption and antitrust immunity for conferences, and stability of rates and reliability of services,” Stragier said.
   “In this respect, the Commission noted that the fact that the report considered that the existence of a causal relationship had not been established called into question the very basis of the EC block exemption for liner conferences,” he added. Regulation No. 4056/86 is based on the premise that liner conferences benefit the industry at large providing stability in the market, and benefits outweigh the potential restrictions on competition of joint price-setting by carriers.
   The Commission will study the general question of exemption for liner conferences further, using the report as a starting point, “but focusing more narrowly on those actual and legal issues that are of particular relevance to the EC liner shipping competition policy,” Stragier said.
   The EC official said reactions to the OECD report on competition were “on the whole cautiously positive,” with the exception of ocean carrier representatives and “a very small minority of countries with strong shipping interests.”
   Stragier reported that the Trans-Atlantic Conference Agreement carriers have made significant amendments to their conference agreement concerning information exchange, following the expression by the EC, in 1999, of concerns about arrangements concerning exchange of information among carriers.
   The so-called revised TACA agreement was notified to the EC in May 1999 and is “the first comprehensive attempt” in Europe to put    into practice new principles about how conferences operate, Stragier said. The EC considers that the most important of these new principles is that conferences members are free to enter into confidential, individual contracts with shippers. “Other key principles included an undertaking on the part of the carriers not to engage in inland price-fixing and the placing of strict limits on the type of information that could be exchanged by conference members,” Stragier said.
   Referring to this new form of liner conference, Stragier said the European Commission started discussions with carriers and shippers several years ago “with a view to breaking the sterile cycle of litigation and establishing a consensus on the way forward.” The revised TACA agreement aims to apply guiding principles agreed by EC and carrier representatives in 1999. However, European shippers’ councils have refused to back the principles since 1999.
   Ocean carriers expect the revised TACA agreement to be approved by the EC.
   However, on Thursday, the secretary of the Dutch Shippers’ Council, Ferdinand Kranenburg, said that the European Shippers’ Council would take the European Commission to court if it approves the revised Trans-Atlantic Conference Agreement. He argued that the transatlantic conference agreement could exchange confidential information about individual carriers’ dealings with shippers.
   The European Shippers’ Council has also recently reiterated its call for the removal of the antitrust immunity of carriers following the publication of the OECD report on liner shipping competition.