Asian shipper groups opposed to Singapore’s block exemption order

Asian shipper groups opposed to Singapore’s block exemption order    The Singapore National Shippers Council and the Asian Shippers’ Council have written a joint letter to the Competition Commission of Singapore (CCS) outlining their opposition to the proposed block exemption order for liner shipping agreements.
   The CCS put forward its plans in April, under which agreements and conferences will be entitled to block exemption if they fulfill certain conditions, such as allowing member liner operators to offer their own service arrangements on a confidential basis. Where the members of a liner shipping agreement collectively hold more than 50 percent market share in any market operated under the agreement, they will have to publish rates and file other information. The proposed duration of the block exemption order, which will take effect retrospectively from Jan. 1, is five years.
   “CCS’s decision to grant the block exemption order to liner shipping agreements is not in keeping with this free trade spirit which Singapore advocates. This will send a wrong message to Asia and the world, which perceive Singapore as a stout defender of the free market,” the two shipper groups said in a joint statement.
   “The antitrust immunity shipping lines have enjoyed for well over 100 years is already obsolete in view of impending changes at the European Commission, which is putting the mechanism in place to outlaw block exemptions on trades from Europe.
   “To accord liner shipping agreements a block exemption order of five years . when the momentum in Europe suggests that changes to the law governing exemption could come sooner, is in our view unnecessarily generous. Singapore’s regulatory environment should be aligned with that already in place for major jurisdictions.
   “Shippers already view with concern Maersk’s acquisition of P&O Nedlloyd, which raises its market share to nearly 20 percent. If preconditions have to be established, it is the councils’ view that the quantum should be lower to allow the free play of market forces and avert any possibility of a monopoly.
   “As the block exemption order distorts the free market, it goes against the grain of Singapore’s free trade policy. And any distortion is self-defeating, as underscored by the boom/bust cycles in the shipping industry. If the block exemption order is deemed necessary to align Singapore with international norms, we urge the CCS to review the terms of the block exemption order as they are unnecessarily generous to liner shipping agreements.”
   An interview with John Lu, chairman of the Singapore National Shippers Council and founding chairman of the Asian Shippers’ Council is in the June issue of American Shipper (pages 56-57).