• ITVI.USA
    15,415.310
    54.710
    0.4%
  • OTLT.USA
    2.761
    -0.007
    -0.3%
  • OTRI.USA
    21.110
    -0.300
    -1.4%
  • OTVI.USA
    15,387.520
    55.710
    0.4%
  • TSTOPVRPM.ATLPHL
    3.300
    0.000
    0%
  • TSTOPVRPM.CHIATL
    3.140
    0.190
    6.4%
  • TSTOPVRPM.DALLAX
    1.590
    0.150
    10.4%
  • TSTOPVRPM.LAXDAL
    3.330
    0.020
    0.6%
  • TSTOPVRPM.PHLCHI
    2.170
    0.020
    0.9%
  • TSTOPVRPM.LAXSEA
    4.080
    0.130
    3.3%
  • WAIT.USA
    125.000
    -1.000
    -0.8%
  • ITVI.USA
    15,415.310
    54.710
    0.4%
  • OTLT.USA
    2.761
    -0.007
    -0.3%
  • OTRI.USA
    21.110
    -0.300
    -1.4%
  • OTVI.USA
    15,387.520
    55.710
    0.4%
  • TSTOPVRPM.ATLPHL
    3.300
    0.000
    0%
  • TSTOPVRPM.CHIATL
    3.140
    0.190
    6.4%
  • TSTOPVRPM.DALLAX
    1.590
    0.150
    10.4%
  • TSTOPVRPM.LAXDAL
    3.330
    0.020
    0.6%
  • TSTOPVRPM.PHLCHI
    2.170
    0.020
    0.9%
  • TSTOPVRPM.LAXSEA
    4.080
    0.130
    3.3%
  • WAIT.USA
    125.000
    -1.000
    -0.8%
American Shipper

EC CLEARS “REVISED TACA,” CONTINUES REVIEW OF LINES’ ANTITRUST EXEMPTION

EC CLEARS “REVISED TACA,” CONTINUES REVIEW OF LINES’ ANTITRUST EXEMPTION

EC CLEARS “REVISED TACA,” CONTINUES REVIEW OF LINES’ ANTITRUST EXEMPTION

   The European Commission has granted an exemption from European competition rules to the so-called “Revised Trans-Atlantic Conference Agreement” of Atlantic Container Line, Maersk Sealand, Hapag-Lloyd, P&O Nedlloyd, NYK, Mediterranean Shipping Co. and Orient Overseas Container Line.

   In an announcement of the decision, the EC also provided more details on its plan to review the current antitrust exemption of conferences in European trades.

   Having been fined a total of 273 million euro (about $250 million) in 1998 for breaking European competition rules, TACA carriers amended their conference agreement by removing prohibited activities and requested approval from the European Commission in 1999 for the “revised TACA.”

   In practice, TACA has operated under its revised conference agreement rules since 1999. The rules allow one-to-one confidential, individual service contracts.

   The EC has now formally approved the revised TACA for a period of six years.

   As a consequence of the 1998 TACA fines in Europe and of the pro-competition U.S. Ocean Shipping Reform Act of 1998, the EC believes TACA conference carriers now operate in a market that is “substantially more open and competitive than was the case four years ago.” Furthermore, an explosive growth in the number of confidential individual contracts between shipping lines and shippers has contributed to an erosion of the power of the conference, according to the EC.

   “The decision comes after a lengthy investigation in the course of which the TACA members agreed to make substantial concessions,” the EC said. The Brussels-based body said it is satisfied the agreement “does not present any threat to competition on the transatlantic shipping routes and can therefore be cleared.”

   “I am very happy that the Commission has been able to close the final chapter in this long-running saga, in a way that takes account of the interests of both shipping lines and transport users,” said European competition commissioner Mario Monti. “We must now turn our attention to the future and consider carefully whether the generous European Union block exemption that the liner shipping sector has enjoyed since 1987 is still justified today.”

   TACA welcomed the EC decision to approve its conference agreement.

   In a joint statement through the TACA conference secretariat, the TACA carriers said they have cooperated with the EC throughout the course of its investigation and have amended the “revised TACA” to address the concerns raised by the regulator.

   “In particular, the provisions relating to the exchange of statistical data between the TACA parties have been revised, as has the authority to enter into temporary/seasonal capacity withdrawal programs,” TACA said.

   TACA said these amendments also address the concerns raised by the European Shippers Council.

   However, Nicolette van der Jagt, secretary-general of the European Shippers Council, told Shippers’ NewsWire that her organization may still challenge in court the European Commission’s approval of TACA.

   This issue will be discussed during the European Shippers Council’s maritime transport council meeting on Nov. 20, she said.

   The EC said concessions made by the TACA carriers have played a part in its approval. The carriers have agreed to “place strict limits on the nature and amount of commercially sensitive information that can be exchanged between members of the conference,” the EC said. They have also agreed to submit reports of contract activity, so the commission can assure itself that the exchange of information between the members of the TACA is not contributing to a decrease in the number of individual contracts.

   Finally, the members of TACA have undertaken not to increase prices in conjunction with any temporary withdrawal of vessel capacity, and to provide the EC with reports designed to check that the withdrawal of capacity constitutes a strictly proportionate response to a temporary decrease in demand from transport users.

   The long-awaited EC approval of the revised conference is regarded as important because the TACA conference was a model for other conferences of carriers in Europe.

   However, the EC warned that its decision “has only limited relevance for conferences operating on less competitive markets.”

   The EC added that certain features of the revised TACA “should … Be emulated by all conferences operating on European Union liner shipping trades.” These features, according to the EC, are:

   (1) Conferences should refrain from inland price-fixing.

   (2) No restrictions should be placed on the right of conference members to enter into confidential individual contracts with transport users.

   (3) The collective regulation of capacity by members of a conference is only permissible where it is necessary in order to adapt to a short-term fluctuation of demand, and it must not be combined with a price increase.

   The EC said liner conferences, such as the revised TACA, benefit from a “block exemption” for collective rate-setting, capacity regulation and other related activities.

   “This exemption mirrors that granted by most other developed economies, such as the United States and Canada,” the EC said. The European regulator said the exemption for collective price-fixing by shipping lines has been the subject of heated debate in recent years and that an OECD report concluded in early 2002 that the justification for maintaining that exemption was “weak or non-existent.”

   The EC said its review of the European antitrust exemption regulation for conferences, Council Regulation 4056/86, “is all the more necessary because no review of the block exemption has been undertaken in the more than 15 years that it has been in force, while market conditions have changed dramatically.”

   The first step in the review process is a consultation paper, which will invite comments from governments, industry and other interested parties on maritime competition issues. The consultation paper will be published by the end of December.

   The review involves an assessment of whether the existing European Union legislation is “adequately adapted to current market conditions.”

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