CP Ships warns shareholders of antitrust reform risks

CP Ships warns shareholders of antitrust reform risks    CP Ships has spelled out the regulatory risks that the company and other container carriers face due to the potential loss of liner carriers’ antitrust exemptions in Australia and Europe in an annual report form filed with the U.S. Securities and Exchange Commission.
   The form notes that the Australian Productivity Commission and the European Commission have both produced reports that envisage tightening the antitrust exemptions enjoyed for many years by carriers.
   CP Ships-controlled carriers ANZDL, Canada Maritime, Cast, Contship Containerlines, Italia, Lykes Lines and TMM Lines are all members of carrier agreements or conferences in the trades to and from Australia or Europe.
   CP Ships told its shareholders in the Securities and Exchange Commission form that the European Commission issued a “white paper” (or proposal) in October that “proposes considering, among other matters, the repeal of Regulation 4056/86 which for some 20 years has permitted, among other conduct and subject to certain conditions, price fixing agreements among conference members.”
   The period for commenting on this white paper has expired and the EC is reviewing various submissions it has received.
   “If such antitrust exemptions were to be eliminated or significantly narrowed, it could materially adversely affect the container shipping industry and CP Ships’ business, financial condition and results of operations,” CP Ships warned, referring to the EC regulatory changes.
   The Canada-registered carrier also detailed the submission made Feb. 23 by Australia’s Productivity Commission of its final report to the Australian government concerning antitrust exemptions in liner shipping.
   “If the Productivity Commission’s recommendation is implemented, the loss of exemptions and new authorizations process will have significant consequences for liner shipping operators,” the company said. The Australian government will release the final report by the end of June.
   The Canadian-registered group said in its Securities and Exchange Commission form that the exemptions of certain types of carrier agreements from antitrust legislation “are important to those carriers who have formed strategic global alliances as well as to other carriers, including CP Ships, primarily in respect of joint service, conference and rate discussion agreements.”
   “Recent legislative and case law developments in the United States, Canada, Europe and Australia have gradually eroded and narrowed such exemptions,” it added.
   However, CP Ships noted that the EC intends to renew its liner consortia regulation, which permits joint operational agreements between liner carriers provided they do not involve cooperation on pricing.