EC renews consortium antitrust exemption

EC renews consortium antitrust exemption    As expected, the European Commission has renewed for another five years the regulation that grants antitrust immunity to liner shipping consortia serving European ports, while making minor adjustments to the previous regulation.
   “The European Commission has renewed until April 25, 2010 a block exemption allowing shipping companies to enter into consortium agreements covering the maritime transport of cargo to or from one or more EU ports,” the EC said Monday. The exemption was first adopted in 1995 and renewed in 2000.
   Consortia are operational-type agreements between liner shipping companies, such as vessel sharing agreements, that do not involve cooperation on freight rates.
   The EC has also introduced some minor amendments to the consortium regulation following consultations with member states and industry. The amendments allow a consortium member the right to withdraw from a consortium agreement without financial penalty after an initial period of up to 24 months, an extension of six months compared to the current regime. In addition, this initial period now also applies where the parties to an existing agreement have agreed to make “substantial new investment” in the maritime transport services offered by the consortium. Such investment is considered substantial when it constitutes at least half of the total investment made by the consortium members. Finally, one of the basic conditions for the grant of exemption to a consortium — that is the existence of effective price competition within the consortium — has been amended: 'Individual confidential contracts' may now also be taken into consideration to demonstrate the existence of such competition.
   The EC said the consortium exemption is closely linked to the block exemption for liner shipping conferences, known as Regulation No. 4056/86. The EC is considering a reform of the liner conference immunity contained in Regulation No. 4056/86. “Due to the close links between the two block exemptions, the Commission considered that it is neither necessary nor appropriate to introduce substantial modifications to the consortia block exemption before the end of the said review,” it said.
   Contrary to liner conferences, operationally focused consortia are seen by the EC and by shippers’ organizations as mild forms of carrier cooperation that also produce clear economic advantages.