European Commission ends shipping consortia antitrust exemption
The European Commission will not extend the EU legal framework exempting liner shipping consortia from EU antitrust rules, known as the Consortia Block Exemption Regulation (CBER).
This decision comes after a review process initiated in August 2022, with the CBER set to expire on April 25, 2024.
The CBER permits shipping lines to enter into cooperation agreements for joint cargo transport services, commonly referred to as ‘consortia.’ The review process gathered input from stakeholders, including carriers, shippers, freight forwarders, ports, and terminal operators, to assess the impact of consortia and the CBER on their operations.
In its Staff Working Document released today, the Commission summarized the findings of its evaluation, indicating limited effectiveness and efficiency of the CBER during the 2020-2023 period. The CBER was found to bring minimal compliance cost savings to carriers and failed to enable smaller carriers to compete effectively with larger counterparts.
“The Commission has concluded that the CBER no longer promotes competition in the shipping sector and therefore it will let it expire on 25 April 2024,” the EC said.
The expiration of the CBER does not make cooperation between shipping lines unlawful under EU antitrust rules. Instead, carriers operating to or from the EU will need to assess the compatibility of their cooperation agreements with EU antitrust rules, referencing guidance provided in the Horizontal Block Exemption Regulation and Specialisation Block Exemption Regulation.
“We appreciate the European Commission’s recognition of the many benefits of vessel sharing to European industry and consumers, even if we disagree with the logic behind the decision to discontinue the CBER. The shift to general EU antitrust rules will create a period of uncertainty as carriers adjust to the new legal structure. Nevertheless, vessel sharing agreements will remain a fully legal and supported way for carriers to ensure efficient and sustainable transport for Europe,” John Butler, President & CEO of the World Shipping Council, said.
Liner shipping services, which involve regular, scheduled non-bulk maritime cargo transport, are typically provided by several cooperating shipping companies in consortia. These collaborations aim to achieve economies of scale and optimize vessel space, with the benefits potentially passed on to users through improved port coverage and services.
“This key sector has undergone significant structural changes, such as carriers’ consolidation, global alliances and vertical integration, resulting in new market conditions, which became apparent during the coronavirus pandemic,” Commissioner Didier Reynders, in charge of competition policy, said.
“Our evaluation has shown that a dedicated block exemption for shipping lines is no longer adapted to those new market conditions. This is why we have decided not to extend the current framework and to let it expire on 25 April 2024.”
Under the Treaty on the Functioning of the European Union (TFEU), agreements restricting competition are prohibited, but Article 101(3) TFEU allows for exceptions if they contribute to improving production, distribution of goods, or economic progress, while ensuring consumers receive a fair share of benefits.
The CBER was introduced in 2009 and has been extended twice, in 2014 and 2020.