EC consultant findings deal new blow to carrier immunity

EC consultant findings deal new blow to carrier immunity    A report on the expected impact of ending European conferences' immunity has found that such a regulatory change would have a limited effect on competition and market structure in liner shipping, and that any change would likely be felt mainly in the smaller European trades.
   Following interviews with shippers and ocean carriers, consultants ICF said in a report prepared for the European Commission’s transport and energy directorate that there was “widespread, but not total, theoretical and practical agreement” that the abolition of the block exemption for liner conferences would not have a significant overall impact on capacity and market structure.
   “We found and virtually all stakeholders agreed that there would not be significant impacts on competition, market concentration, or the provision of capacity in the largest trades,” it said.
   Some industry players interviewed by the consultants said there is likely to be a greater impact from the ending of the conference immunity on smaller trades than on the larger volume, major trades. “Especially while market adjustments are being made, there is the potential for liner capacity withdrawals that would not be instantly filled,” it said. But ICF cautioned that it also came across industry stakeholders who did not agree with this differentiation between the large and the small trades.
   In a comment that is likely to be seized by supporters of the status quo, ICF wrote in its report that bankruptcies or substantial downsizing are possible “for the least efficient or least nimble operators.” “Smaller trades, smaller shipowners/liners and smaller shippers are likely to feel these effects most keenly,” it said.
   ICF said there was also a lack of agreement among industry stakeholders on the impact of withdrawing the carrier immunity as far as tariffs and rate volatility are concerned.
   Shipowners in Europe have argued that the conference immunity has provided a greater stability of supply and freight rates, while the European Shippers’ Council has taken the opposite view that conferences have no stabilizing effect on freight rates.
   “A considerable degree of volatility was found in the shipping rate data that suggests conferences are not effectively maintaining rate stability,” ICF said in its report. “Other, recently liberalized transport modes that share some important characteristics with shipping have exhibited significantly less volatility. However, counter-examples with high volatility such as the spot market for tankers do exist.”
   The consultant also admitted that there is not enough public data to assess the full effect of conferences on market power, price and volatility.
   ICF said there are “likely net overall benefits” from the ending of the immunity, with transition costs resulting “in some local pain.”
   The consultant’s report can be found at https://europa.eu.int/comm/competition/antitrust/others/maritime/review/reviewofregulation4056_86.pdf.