Competition Commission raids shipping lines

In a move reminiscent of similar actions against airlines and freight forwarders in the recent past, the European Commission last week undertook unannounced inspections of several container shipping lines. The Commission asserted that the companies concerned may have violated the antitrust rules that prohibit cartels and restrictive business practices and/or abuse of a dominant market position (Articles 101 and 102 respectively of the Treaty on the Functioning of the European Union). FTW understands that the reason for the raid relates to possible collusion by the carriers on the withdrawal of capacity during the worldwide recession two years ago, or on the setting of surcharges such as bunker adjustment factors. Maersk, CMA CGM, Hapag-Lloyd , Hamburg Süd and Neptune Orient Lines are among those already named, with several more thought to be involved. The Commission officials were accompanied by their counterparts from the relevant national competition authorities. Unannounced inspections are a preliminary step into suspected anticompetitive practices. The fact that the Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour and nor does it prejudge the outcome of the investigation itself. The Commission respects the rights of defence, in particular the right of companies to be heard in antitrust proceedings, a spokesman said. There is no legal deadline to complete inquiries into anticompetitive conduct. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defence. The demise of the conference system in 2008 means that lines are no longer able to work together on price and capacity issues. In August last year, Peter Newton, director of Seaboard and Cape Town port users’ spokesman, issued a warning about this very issue. He told FTW at the time that shipping lines should be joined with airlines in the SA Competition Commission (CC) investigative probe into alleged price-fixing of fuel surcharges. “By definition a surcharge is and should be of short duration,” he told FTW, “to be withdrawn or incorporated in the basic ocean freight at the next review.” However, he suggested that the shipping lines’ bunker adjustment factor (baf) was a more permanent feature, subject to up or down adjustments as the fuel price circumstances demanded. “The snag,” he added, “is that baf has been abused by ocean carriers and airlines alike as a major source of unjust enrichment – and is now attracting increasing attention of competition authorities around the world.” In support of his case, he highlighted the news at the time, that the CC had referred eight air cargo carriers to its Competition Tribunal for alleged collusive behaviour that had endured from 1996 to 2006. The issue of baf in the liner shipping industry, however, remains unresolved, said Newton, despite extensive efforts by shippers over recent years to have open discussions with the shipping bodies on what he described as the “unsatisfactory status” of baf.