Officials with the Global Shippers' Forum and European Shippers' Council said Friday that guidelines announced by the European Commission regarding the application of competition rules to the liner shipping sector don't sufficiently rule out ambiguities that could lead shipping lines to continue collusive practices.
In October, the European Commission will enact a ban on all steamship line conferences.
In a statement, the ESC said it supports the release of the guidelines "Because it believes the carriers need some things spelled out about the law," the council said. "There were a number of areas, however, that ESC thought could be misinterpreted and lead the carriers to believe that a system of information exchange could be permitted which was based around an objective which ultimately reduced competition."
ESC contends that proposals by the European Liner Affairs Association, which represents the liner carriers, to include information-sharing provisions in the guidelines runs counter to the point of the conference ban.
"We are dealing with an industry that has no experience of working in a truly competitive environment," said Nicolette van der Jagt, ESC secretary general, in a statement. "The lines have made joint decisions for decades. They have collectively sought to ensure that jointly they do not oversupply the market. They have never made their own decisions without this objective in mind. This industry therefore needs guidance as they make the transition to a competitive industry based on independent thought, independent analysis and independent action.
"In referring to systems of information exchange, the guidelines can only refer to those that do not result in a reduction of competition: this is the law. Given that it was the conclusion of the European Commission this time last year (in its "Issues Paper" that the system of information exchange proposed by the European Liner Affairs Association would enable collusion between the lines to manage capacity, keep rates high, and reduce competition, any reference to the same system as proposed by the ELAA should either be removed from the text of the guidelines or it should be made clear that they are not acceptable under Community competition law."
Van der Jagt said the ELAA has a significant interest in preserving some level of information sharing, but that any such sharing would hurt shippers.
"The ELAA proposed information exchange would result in a reduced level of competition than there would be without it because carriers would be given sufficient information as to accurately assess what their competitors were going to do, because they all share the same objective -- to keep rates up by not oversupplying the market," she said. "The system would effectively monopolize the provision of volume data, capacity data and price indices. Recent information in all these areas would be collected from every transport document (e.g. bills of lading) on every trade from every line, combined with publicly available information on capacity forecasts, the results and analyses would be discussed so that only one set of conclusions could possibly ever be reached."
"The lines know each other so well -- and still cooperate with each other in alliances, consortia and liner conferences elsewhere in the world, that each will be able to anticipate their competitors" behavior and align their conduct accordingly so as to ensure the supply-demand balance is restored if necessary. There is nothing wrong in an information exchange, which is used to work out how to compete more effectively and beat the competition. This is what other industries do; this is what we want the liner shipping sector to do."
Meanwhile, John Lu, chairman of the Asian Shippers' Council, said that Europe must hold true to the repeal of liner antitrust exemption in order for reform to happen elsewhere.
"The change of culture and behavior of liner carriers is likely to be affected by virtue of the continuation of liner conferences in Asia," Lu said. "These are the same carriers that are dominant in the European trades. We note change in Asia -- in this regard one should acknowledge the progressive removal of the rights of liner conference members to set and impose tariffs on their customers in China and India. Both are considered rightly to be the engines of world economic growth in the coming decade. Such moves to liberalization in these countries of Asia will help to diminish the influence of liner shipping conferences more rapidly. It is important to the rest of the world that Europe does not reduce the changes that are afoot by enabling the perpetuation of the liner-conference business model and approach that we see from the ELAA proposals over a system of information exchange.
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