Top carriers in the firing line for price signalling

Fourteen of the world’s top container carriers are currently being investigated by the European Commission (EC) about whether they have broken European competition rules through signalling their intended freight rate increases to each other (See FTW Online November 25). EC sources have revealed that this latest antitrust investigation is linked to raids conducted in May 2011 when the investigators descended on the European offices of the world’s 12 biggest container lines looking for proof of possible price-fixing between the lines. Now Brussels has said that since 2009 the companies have made regular public announcements of their price-increase intentions through statements on their websites and in the specialist trade press. The commission said the practice may allow the companies to signal their future price intentions to each other and may harm competition and customers by raising prices in the market for container liner shipping transport services on routes to and from Europe. It will now investigate whether this behaviour amounts to a concerted practice in breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU) and of Article 53 of the European Economic Area (EEA) Agreement. Article 101(1) prohibits agreements or concerted practices between undertakings which restrict or distort competition within the internal market. The French-based shipping industry information platform, Alphaliner, supported the EC’s assumption. It said prima facie evidence suggested that Brussels might have a case against the carriers for price signalling. “Far East-Europe carriers have announced at least 34 rate increases since 2009. In most cases, the timing and quantum of the increase were largely similar for all the main carriers, with announcements made by carriers within a few days of each other. “Although carriers varied the amount of the rate increases by US$25 to US$100 per TEU at certain dates, it could still come under the EC’s ambiguous concerted practices rules as tacit collusion, which does not require an explicit agreement to fix prices. “On several occasions, carriers who announced lower rate increases subsequently adjusted the quantum of their rate increases to match the average levels announced by the majority of the carriers, which provides further evidence that price signalling was effective in driving carrier rate increase decisions.” Meantime Lloyds List reported that “a well-placed industry source” had named the 14 shipping lines facing antitrust proceedings. These were: China Shipping Container Lines, CMA CGM, Cosco Container Lines, Evergreen Line, Hapag-Lloyd, Hanjin Shipping, Hyundai Merchant Marine, Maersk Line, Mitsui OSK Line (MOL), Mediterranean Shipping Company (MSC), OOCL, NYK Line, United Arab Shipping Company and Zim Line. Maersk Line has indeed confirmed to FTW that it was included in the investigation, and released to us its official statement. “Maersk Line has taken note of the European Commission’s decision to open a formal investigation,” it said. “No formal letter from the Commission on the matter has been received yet but we have been informed that we will be part of the investigations. “AP Moller-Maersk has no reason to believe that Maersk Line has behaved in a manner not in accordance with EU competition law. The company has cooperated with the European Commission and will, of course, continue to do so to the extent required during the investigation.” Although FTW has also questioned our local contacts at MSC and CMA CGM, nothing was forthcoming before our deadline. However, these two lines – along with Hapag- Lloyd and Evergreen – have confirmed to the European press that they were part of the antitrust proceedings. And there is some muscle in the lines under investigation. All 14 lines are among the Top 20 carriers in the world, and all but one of the Top 10 shipping lines are also facing the antitrust proceedings. The other six, which have so far escaped investigation, are APL (in the Top 10) CSAV, Hamburg Sud, Yang Ming, K Line, and Pacific International Lines. Also, the news comes at a less-than-fortunate time for the three largest European container shipping companies, Maersk, MSC and CMA CGM, who currently have an application for their P3 collaboration lodged before competition authorities in the EU, US and China. The latest news is that the EC has informed the container liner shipping companies concerned and the competition authorities of their home countries that it has opened proceedings in this case. The EC has not placed any timeline on when this enquiry, which began three years ago, will be concluded. There is no legal deadline for bringing an antitrust investigation to an end. “The duration of an investigation depends on a number of factors,” said the official notice, “including the complexity of the case, the cooperation of the undertakings with the commission and the exercise of the rights of defence.” INSERT Brussels has said that since 2009 the companies have made regular public announcements of their price-increase intentions through statements on their websites and in the specialist trade press.