Friday, October 11, 2013

Big 3 Container Shipping Groups Get a Broadside as Freight Interests Consult with EU Commission

New Maersk, MSC and CMA CGM Alliance Under Fire as Global Shippers' Forum Raises Concerns
Shipping News Feature

ASIA – EUROPE – As we predicted in an article in June, the proposal by the ‘Big 3’ in the world of container shipping, Maersk Line, Mediterranean Shipping Company (MSC) and CMA CGM, to form the P3 alliance in order to consolidate their individual offerings on the major East – West trade lanes across Asia – Europe, Trans-Pacific and Trans-Atlantic, is coming under fire from freight interests, with the Global Shippers’ Forum (GSF) raising its concerns with the European Commission Competition Directorate in Brussels, a step which may only be a preliminary to further such enquiries in other jurisdictions.

The purpose of the GSF submission to the EC Competition Directorate, is to enable it to thoroughly examine the essential features and details of the proposed alliance in order to formulate its own legal analysis of the proposal. In particular, the GSF has asked for confirmation that the European Commission has commenced a formal investigation into the terms of the P3 agreement.

Members of the GSF have indicated that if the proposed global alliance does indeed fall outside the EU consortia block exemption such a matter requires a suitable in-depth assessment by the relevant authorities, and the GSF has referred to such an alliance, if permitted, as a ‘game changer’ which will fundamentally change the structure and competitive state of the global container shipping market. Upon submitting its questions to the EU, GSF Secretary General, Chris Welsh said:

"We have raised these questions with the European competition authorities on behalf of shippers from all over the world because they are rightly concerned about the market impact of the P3. The question on every shipper's mind is 'what will be the impact on my rates and the quality of services?' 

"Shippers are rightly worried about the potential of the P3 to eliminate effective competition in the world's main liner trades. We therefore need an in-depth assessment of the P3. That's why we are asking the European Commission to provide us with the essential details of the P3 and to confirm whether they have started a formal investigation or intend to do so. We need information and answers so that the GSF is in the position to protect the commercial interests of shippers internationally.

"GSF members are equally focused on expected future inquiries of other national competition authorities with competency and regulatory oversight of maritime transport sector, especially in Asia and in the United States where the Federal Maritime Commission is uniquely positioned to assess the potential competitive impacts of this never-before-seen aggregation of market share."

The Global Shippers' Forum represents, via its members across the world, thousands of shippers from every major trading region.