Thursday, June 22, 2017

South Africa Rejects ONE Shipping Merger

Prior Offences Return to Haunt Asian Freight Carriers
Shipping News Feature
SOUTH AFRICA – JAPAN – The South African Competition Commission has rejected the proposed intermediate merger of Japan’s three biggest container shipping lines Nippon Yusen Kabushiki Kaisha (NYK), Mitsui O.S.K. Lines (MOL), and Kawasaki Kisen Kaisha (K Line). The ONE, as the shippers have decided to name the merged entity, aimed to address the industry-wide problem of overcapacity currently plaguing the ocean freight market, which has seen several shippers enter collaboration agreements in order to survive, else face the same fate as Hanjin Shipping or Rickmers.

The commission found that while the structure of the container shipping market is conducive to coordination, based on previous collusive conduct in the industry worldwide, this merger would also create a platform for coordination in the car carrier market which has a history of collusion involving the merging parties. NYK, MOL, and K Lines have been prosecuted in some jurisdictions, while investigations are underway in others.

The SACC is of the view that the proposed transaction is likely to increase the scope for coordination in the container liner shipping market, while creating a platform for coordination in the car carrier market.

The Commission further found that there are no efficiencies that outweigh the anticompetitive effects of this transaction and that there are also no remedies sufficient to address these effects. The Commission also found that there are no public interest issues that could outweigh the anticompetitive effects arising from the proposed transaction.