Tuesday, May 24, 2011

More On The Anti Trust Investigation Of Container Ocean Freight Carriers

Industry Resentful of EU Interference after Conference Agreements Banned
Shipping News Feature

EUROPE – Following last weeks story regarding raids by the EU Competition Commission on several major container carriers it seems the investigation was in part sparked by the shipping lines ability to bounce back from two dismal years after the abolition of the conference lines agreements which had traditionally provided stability within the ocean freight industry.

The fact that nearly all the big box carriers have not only survived the slump without any major casualties, but forged forward with a return to profit must seem suspicious to the anti trust authorities, knowing as they do that all the lines regularly communicate at the highest level, as is to be expected.

We have pointed out many times in the past two years that it needed a determined effort by all parties to maintain, and indeed increase container freight rates, in order for all to survive. A failure by a major shipping line due to a temporary downturn could prove catastrophic whereas permanently lower traffic levels coupled with overcapacity would mean failures were inevitable.

With new build ships ordered years ago now coming on stream the temptation to reduce rates may prove irresistible to some and the EU Commission clearly feels a degree of collusion may have influenced the current trend to maintain rates, as opposed to a rash of common sense by all the major container lines as they stared into the abyss a few months ago.

Most of the biggest names received a visit from the anti trust squad, these reportedly included the flags of a sort of United Nations group with French CMA CGM, German Hapag-Lloyd, South Korean Hanjin, Hong Kong-listed Orient Overseas (International) Ltd (OOIL) , Taiwan's Evergreen Marine and Singaporean Neptune Orient Lines (NOL)as well as the biggest in the world Maersk Line called upon. Some refused to give statements; others merely confirmed they had received a ‘visit’. Maersk’s Michael Christian Storgaard spoke to us to say:

"The EU officials ended their visit late on Thursday evening, and as far as we are concerned the whole visit was handled in a professional and orderly manner. Going forward, the process will be handled according to the EU's procedures, and for any comments on that we have to refer you to the European Commission.

"As stated, the purpose of the visit has been to examine whether there have been any possible infringements of competition rules. However, the fact that the Commission visited our premises does not mean that the company has engaged in anti-competitive behaviour nor does it prejudge the outcome of an investigation. We do not know when the Commission will finish its investigation. It is therefore also far too early to speculate about what the outcome of the investigation will be, including the possibility of fines.

"We have assisted the Commission, and we do not have any reason to believe that the company has behaved in a manner that is not in compliance with the rules. We do our utmost to comply with competition law in all the jurisdictions in which we operate. We continuously work to ensure that our employees are aware of current competition rules."

The general opinion within the industry is that this is a fishing expedition rather than a targeted investigation. If so the EU is likely to be viewed even more disdainfully by a sector of the industry which feels it is quite capable of policing itself in conjunction with a natural competitiveness which is inherent within a profession which has been around, through good times and bad, since long before the EU body was even considered.