Does China antimonopoly law apply to ocean carriers?
China’s new antimonopoly law is creating more confusion than clarity among the shipping industry, according to a Shanghai-based competition law attorney.
The law, which went into effect Aug. 1, specifically prohibits price-fixing arrangements for all businesses, as well as prohibiting any company from attaining higher than a 50 percent share in any market.
However, ocean carriers operating in China have still been carrying on with collective setting of rates and surcharges — except for services connecting China with the European Union, where a ban on collective rate-setting went into effect in mid-October; also services connecting China to the United States would be governed by the Federal Maritime Commission regulations.
Much of the confusion lies within the ambiguity of the new antimonopoly law. It neither explicitly states the liner industry is subject to, nor exempted from antimonopoly enforcement, leading both sides to interpret the law to suit their needs.
'In theory, the law covers all entities,' Kirstie Nicholson, Shanghai-based counsel in Lovells’ Competition, EU and Trade practice, told American Shipper Tuesday. The antimonopoly law 'is silent on its relationship with ocean shipping regulation.'
Ocean carriers are clinging to the belief that a previous Chinese maritime law granting them antitrust exemption supercedes the new antimonopoly law. But shippers are insistent the new law should force carriers to disband conferences and negotiate rates with shippers individually.
“There's a clear conflict between that law and the competition law,' Nicholson said. “This isn't unusual in Chinese law. And normally, the later legislation would prevail.'
Nicholson said the antimonopoly law was developed by a higher governmental body than the maritime law was, which would also indicate that it would take precedence over the previous law. But again, nothing is certain for now.
'We've heard from people in the maritime industry that it doesn't matter what the AML says,' Nicholson said. 'They say, 'We've been told by our contact at the Ministry of Transport to keep doing what we're doing.' '
The three agencies responsible for enforcement have indicated they will meet to discuss guidelines, and that might very well provide an indication of whether liner shipping falls under the auspices of the new legislation. For now, shippers, carriers and attorneys are in a holding pattern. ' Eric Johnson