Economics and Regulations

   EU Competition Policy


Evolution of EU Competition Regulations for the Maritime Sector

D2.1.4.1 EU Competition Policy Maritime Sector AUEB 15May09.pdf

Vasiliki Bageri AUEB

In 1986, through the Regulation No 4056/86 (a package of four regulations concerning maritime industry [1] , Maritime transport was essentially exempted from EU competition policy, more specifically from article 81(1) that prohibits agreements between firms. Conference liners were permitted to fix prices - the freight rates - between their members. The rationale was that conference liners generate substantial benefits to shippers too. In 2006 after long deliberations the Commission passed a new regulation that became effective in October 2008, bringing the Maritime transport sector in line as far as the application of article 81(1) of EU Competition Policy is concerned. Conference liners are prohibited as in other sectors; unless the combined market share is less than 30% (this kind of measure is called a "Block Exemption"). This new regulation has been resisted and is still been resisted by shipping companies but shippers associations are all for it.

There are also new measures for tramp shipping (the pools) and for cabotage.

Repelling Regulation 4056/86 appears totally justifiable as  the conditions for an exemption appear to be no longer fulfilled. There is no conclusive economic evidence that the assumptions on which the block exemption was justified at the time of its adoption in 1986 are, in the present market circumstances and on the basis of the four cumulative conditions of Article 81(3) of the Treaty, still justified.

In addition the Commission came to the conclusion that the exclusion of cabotage and tramp vessel services from the scope of Regulation 1/2003 had no justification and so the Regulation should be amended to include both of these services.

Both liner and tramp shipping operators search for an alternative form of cooperation, to conferences and pools respectively, that won’t fall into the scope of Article 81(1).

The effect of the repeal of Regulation 4056/86 is that agreements having an actual or potential effect on trade between EU Member States and having the object or effect of preventing restricting or distorting competition in the EU to an appreciable extent are prohibited in respect of their restrictions.

Pools, as with other looser forms of cooperation involving actual or potential competitors, are by virtue anti-competitive. Following the Commission’s reform program, it has become a priority for all operators to examine the extent to which pools might have an impact on EU trade and to analyze them under the EC competition rules.

[1] Journal: Interim Report of The Multimodal Group “Maritime Transport Report”

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