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ACCC Seeks Views on Ocean Liner Shipping Class Exemption

The Australian Competition & Consumer Commission (ACCC) has issued a discussion paper seeking comments on a possible class exemption for ocean carriers providing international liner cargo shipping services to and from Australia.

Liners currently have access to broad exemptions from Australia’s competition laws.

These exemptions are set out in Part X of the Competition and Consumer Act 2010 (Cth) (the CCA) which permits liner shipping operators to enter into agreements with each other about commercial matters such as freight rates, the vessels to be used, and the quantity and kinds of cargo carried on particular trade routes.

Part X allows operators to make these agreements without risk of breaching competition laws, as long as the agreements are appropriately registered.

However, the 2015 Competition Policy Review (Harper Review) of competition law found that the liner shipping industry’s exemptions under Part X, put in place during the 1960s, are outdated, unnecessary and should be repealed.

The Harper Review recommended that the ACCC develop a class exemption for liner shipping agreements. This class exemption would only apply to agreements that are not likely to substantially lessen competition or are likely to result in overall public benefits.

As explained, a class exemption would help clear the way for the repeal of Part X.

Specifically, it would provide legal protection for certain types of coordination among liners and their customers without them having to apply to the ACCC.

“Australia’s Part X regime is one of the most permissive of its kind among developed countries, several of which have recently moved to scale back their own competition exemptions for liner shipping,” Rod Sims, ACCC Chair, said.

“These sorts of exemptions have become harder to justify, as cargo ships have become bigger and the industry has consolidated.”

“We recognise, however, that some limited co-ordination between liners visiting Australia may be in the public interest, by supporting efficient shipping services. This consultation process will allow us to examine how liners co-ordinate, so we can make sure the proposed class exemption would only apply to conduct that is clearly beneficial,” Sims added.

“We are also keen to hear from the industry about whether the class exemption should extend to collective bargaining by cargo owners and their representatives,” ACCC Chair continued.

The ACCC invites submissions in response to the discussion paper by 28 February 2020.