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FEFC TO NOTIFY CAPACITY REDUCTION PACT TO EC

FEFC TO NOTIFY CAPACITY REDUCTION PACT TO EC

   The ocean carriers of the Far Eastern Freight Conference will notify a proposed agreement to reduce ship capacity in the Asia/Europe trade to the European Commission’s competition directorate this week.

   Conference attorneys are finalizing the agreement that will be presented to the EC, asking for an individual exemption from European competition laws.

   The carriers’ lawyers and the EC competition lawyers have already met several times to “talk through the issues,” a source at the commission said. EC officials were reportedly positive about to the Asia/Europe plan to reduce capacity collectively by 10 percent between October and March 2002.

   “The EC has been very constructive and business-like,” said Philip Ruttley, the London-based lawyer at Clyde & Co. who represents the FEFC.

   The agreement is to be known as “the temporary schedule and cooperation program” and the FEFC expects to start implementing it next week.

   If the EC raises objections to the plan, carriers may have to terminate the agreement.

   The EC competition directorate blocked the former capacity management program of the Trans-Atlantic Conference Agreement, but approved a short-term seasonal vessel withdrawal and cooperation program submitted last year by the FEFC.

   The competition directorate is against capacity withdrawal programs with the sole purpose of raising freight rates, a source at the EC told American Shipper.