The European Commission decided on 10 October not to extend the EU legal framework which exempts liner shipping consortia from EU antitrust rules (Consortia Block Exemption Regulation or ‘CBER’).
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1. What is the Consortia Block Exemption Regulation (‘CBER’)?
Liner shipping services comprise the provision of regular, scheduled non-bulk maritime cargo transport (the vast majority in containers) on a specific route. They require significant levels of investment and therefore are regularly provided by several shipping companies cooperating in “consortia”.
Consortia represent agreements between liner shipping companies (“carriers”) on joint operation of services, which generally lead to economies of scale and better utilisation of the space of the vessels. The CBER, adopted in 2009, exempts consortia from the prohibition of Article 101(1) of the Treaty on the Functioning of the European Union (‘TFEU’), provided certain conditions are met. Those conditions are: (i) consortia may not contain hardcore restrictions (price fixing, capacity or sales limitations except capacity adjustments in response to fluctuations in supply and demand , allocation of markets or customers); (ii) the market shares of consortia may not exceed 30%; and (iii) consortia must give members the right to withdraw with a maximum period of notice of 6 months (12 months in case of highly integrated consortia).
2. Why has the Commission decided not to extend the CBER?
The Commission does not put into question the potential benefits of cooperation between carriers to jointly operate liner shipping services. Nor has the Commission changed its mind that consortia may be an efficient way for providing and improving liner shipping services that also benefits customers.
However, since the CBER was adopted in 2009, market developments in the liner shipping sector have shown that a dedicated block exemption regulation is no longer fit for purpose. Overall, the evidence collected from the relevant stakeholders and market participants points towards the low or limited effectiveness and efficiency of the CBER throughout the 2020-2023 period.
Given the small number and profile of consortia falling within the scope of the CBER, the CBER brings limited compliance cost savings to carriers and plays a subordinate role in carriers’ decisions to enter into a consortium.
Over the evaluation period, the CBER was no longer enabling smaller carriers to cooperate among each other and offer alternative services in competition with larger carriers. In addition, stakeholders other than carriers generally call for strengthened supervision of the sector rather than administrative simplification. This tends to show that the balance between the needs of effective supervision and administrative simplification pursuant to Article 103 TFEU, which originally supported the adoption of the CBER, has shifted.
The expiry of the CBER does not mean that consortia are prohibited in the EU. It simply means that they are subject to the EU antitrust rules that apply to all economic sectors. In particular, carriers would need to self-assess the effect of their cooperation under the guidance provided in the Horizontal Guidelines and the Specialisation Block Exemption Regulation. The evaluation has shown that such guidance is well suited for the competition assessment of consortia as it better accounts for certain specific features of the liner shipping sector (e.g., vertical integration of certain carriers, heterogeneity in the size of trade and carriers).
3. Without the CBER, will carriers face legal uncertainty?
The evaluation of the CBER has shown that the Regulation does not bring as much legal certainty as it aimed to. Most of the consortia active in the EU fall outside the scope of the CBER. However, this has not deterred carriers from cooperating.
The expiry of the CBER does not mean that cooperation between carriers would be prohibited under Article 101 TFEU. It only means that, in the absence of a specific regime, carriers will self-assess compliance with Article 101 TFEU by using the extensive guidance provided in the Horizontal Guidelines and the Specialisation Block Exemption Regulation, which apply to all economic sectors.
4. Will the Commission adopt sector specific guidance after the expiry of the CBER?
The evaluation of the CBER for the 2020-2023 period has not demonstrated a need for sector specific guidance. Carriers operating to or from the EU will self-assess the compatibility of their co-operation agreements with EU antitrust rules based on the extensive guidance provided in the Horizontal Block Exemption Regulation and Specialisation Block Exemption Regulation that apply to all economic sectors.
Furthermore, the Commission’s Staff Working Document, summarising the findings of the evaluation, contains clarifications on certain legal issues raised by stakeholders during the consultation activities (e.g., on the applicability of the Specialisation Block Exemption Regulation to consortia).
Source: European Commission
