SA awaits clarity on future of shipping line consortia

in Europe is set to start working soon under clearly defined rules about shipping line consortia – all the dos-and-don’ts – the local SA industry is as yet barren of any legislation. Following the demise of line conferences in Europe on October 1, the idea of consortia has been developed – with the European Commission (EC) having revised the text of the consortia block exemption that is due for renewal in 2010. This has met with mixed sentiments. The European Shippers’ Council (ESC) is in favour of consortia, Lloyds List reported, covering arrangements such as vessel-sharing or space exchange agreements that improve operating efficiency without impeding competition between partner lines. But the container lines say that the individual members of consortia compete fiercely and are dismayed at some of the proposed changes – which they feel could force a disbandment of a number of what they termed “important” alliances. The main objection is levelled at the EC’s intended ruling that any consortia or alliances have their market share aggregated before granting them block exemption. And they’ve proposed that the market share threshold will be 30%, a level at which some co-operative arrangements would come adrift. This danger prompted the European Liner Affairs Association (ELAA) to try to persuade the commission to modify the draft before the month-long stakeholder scrutiny expired, according to executive director Chris Bourne. But what is the situation in SA – where shippers point to consortia like the SA-Europe Container Service (Saecs) possibly falling foul of such an aggregate ruling? Nothing, according to Tony Norton, maritime lawyer at Garlicke & Bousfield and legal adviser to the SA shipping line industry. “We have applied for exemption for consortia in terms of the Competition Act,” he told FTW. But this application was started as far back as 1998, and has been held up in the works since then. And the case of aggregated market share? This, Norton said, would be better answered by a corporate lawyer who is intimately familiar with the Competition Act. So FTW put this question before Jean Meijer, corporate lawyer at Bowman, Gilfillan. “There is nothing in the act, or in the guidelines to the act,” she said, “about any market share threshold.”