Australia commission carrier immunity reform report due Friday
The Productivity Commission, an advisory body to the Australian government on economic reform, will publish a draft report on a potential reform of the antitrust immunity regulation of carrier agreements in Australia’s liner shipping trades.
The commission has been working since June on a review of Part X of the Trade Practices Act 1974, Australia’s antitrust regulation. Part X describes the conditions under which international liner operators are permitted to form conferences to provide joint liner cargo shipping services for Australian exporters and importers. The Australian government wants to know if the country’s antitrust exemption of ocean carriers should be retained or reformed, and asked for a final report from the Productivity Commission by Dec. 23.
The commission has received 24 submissions from industry, academics and various arms of government. As with other regulatory reviews around the world, industry and government disagree on whether continued immunity benefiting carriers and on conditions that should be attached to this immunity.
In its submission, the country’s influential competition watchdog, the Australian Competition and Consumer Commission, recommended that Part X of the Trade Practices Act 1974 be reformed. The competition commission recommended that the automatic immunity of carrier agreements be abolished and replaced by a system of individual authorizations under which carriers would bear the burden of justifying the need for an exemption.
“This submission notes the increasing skepticism in international attitudes towards the automatic antitrust immunity granted by competition regulators to anticompetitive agreements amongst liner companies involving collective discussion and setting of freight rates,” the Australian Competition and Consumer Commission said.
“An issue for the Productivity Commission to consider is whether Australia should follow the example of the European Commission in repealing automatic antitrust immunity for collective rate setting agreements,” it added.
The Australian Competition and Consumer Commission’s submission cited the 2002 report of the Organization for Economic Cooperation and Development, which recommended that all OECD member countries consider removing antitrust exemptions for joint pricing and rate discussions.
The Australian Competition and Consumer Commission noted there are three categories of registered agreements among liner shipping companies operating on Australian trades: discussion agreements, conference agreements and consortia agreements.
If the automatic immunity of carrier agreements is removed, though, this should not apply to long-established arrangements in place in the industry, but only to new carrier agreements, according to the competition commission.
Shipping Australia, an association representing carriers in Australia, has called for a retention of the immunity of conferences and discussion agreements, but with certain non-legislative changes.
It has opposed the Australian Competition and Consumer Commission’s proposed move to a system of authorizations, which it described as unrealistic. It cited the likely negative impact such a lack of certainty would have on investment in the Australian trades, as well as the cost and lack of timeliness of authorization procedures.
The Australian Peak Shippers Association said in its submission to the Productivity Commission that it supports the retention of the Part X immunity of carriers, but with major changes to provide greater safeguards to exporters. It wants discussion agreements to stop enjoying the benefit of the immunity, as well as a tighter regulation of surcharges. Under a reformed regulation, Australian exporters should be allowed to negotiate confidential agreements directly with individual members of a conference or consortium, “similar to arrangements contained in the U.S. Ocean Shipping Reform Act 1998,” the shipper organization said.
The Productivity Commission expects to ask supplementary submissions by the end of November once its draft position paper has been published. Public hearings on the paper will be held in early December to allow the publication of its final paper to the government by Dec. 23.