Report: EU to settle ocean carrier antitrust suit

Industry leader Maersk Line, along with MSC and 13 other container lines, might not be subject to further penalties stemming from a five-year European Commission probe, according to a report from Reuters news service.    European Union antitrust regulators may settle with ocean shipping firms, essentially ending a five-year probe into how the companies set and announce rates, according to a report from news service Reuters.
   The Reuters story quoted “three people familiar with the matter,” who said the European Commission will likely announce its decision next month and that a settlement agreement would mean no finding of wrongdoing on the part of the carriers. It would also mean the companies, which include industry leader Maersk Line, second-largest carrier Mediterranean Shipping Co. (MSC) and 13 others, would not be subject to any fines or additional penalties resulting from the investigation.
   The other 13 firms are CMA CGM; Hapag Lloyd and United Arab Shipping Company (UASC), which just yesterday announced plans to merge; COSCO and China Shipping, which also merged recently at the behest of the Chinese government; Hamburg Sud; Evergreen Marine; OOCL; Hanjin Shipping; Hyundai Merchant Marine (HMM); Mitsui OSK Lines (MOL); Nippon Yusen Kaisha (NYK); and ZIM.
   The case, which began in May 2011 with EC officials raiding carriers’ corporate offices and became a formal investigation in November 2013, focused primarily on the general rate increase (GRI) mechanism, the way in which companies communicate pricing hikes to their customers. Antitrust regulators have argued that such methods could be considered collusive as carriers tend to announce the same rate increases on the same trade lanes almost simultaneously.
   The carriers in February offered to publish binding actual rates 31 days before they go into effect, with the figures acting as a price cap, prompting the commission to seek feedback from shippers and competing lines about the proposal, which would be valid for three years if accepted by the EC.
   Although carriers will likely be happy to escape any finding of wrongdoing and subsequent fines, greater rate transparency could cause prices to sink even lower as firms race to the bottom in an attempt to retain market share.
   Container shipping rates have plummeted in the last year and a half due to weak global trade growth and rampant overcapacity, with some lines reportedly now offering rates at a negative margin. Further rate deterioration could lead to more mergers and acquisitions in the industry, or widespread removal of vessels from service in order to reduce available capacity.