Click here for a confidential contact or call:


Container Shipping Companies Seek To Steer Clear Of European Antitrust Shoals

Posted  June 9, 2014

A View from Constantine Cannon’s London Office

By Natalia Mikolajczyk and Richard Pike

Major container shipping companies are attempting to resolve the European Commission’s antitrust probe into their practice of publicly announcing price increases.

The two biggest players in the container shipping market, A.P. Moeller-Maersk A/S and Mediterranean Shipping Company, hope to end the proceedings without paying any fines, according to news reports.

Since 2009, container liner shipping companies have been publicly announcing their plans to increase prices, often through press releases available on company websites.  Between 2009 and 2013, carriers on the benchmark Asia-to-Europe route gave advance notice, via press release, of at least 34 rate increases.  These announcements, which were made several times a year, included information on the amount of the rate increase and the date of implementation.

The industry practice of publicly announcing planned price hikes started after the Commission in 2008 banned the shipping companies from fixing prices and capacity on routes.  The so-called ban on “liner shipping conferences” happened just before the 2009 financial crisis, which led to industry-wide problems of unprofitability, overcapacity and volatile rates.

In 2011, the European Commission raided offices of the world’s biggest shipping lines, including A.P. Moeller-Maersk A/S, CMA-CGM SA and Hapag-Lloyd AG.  These raids followed an investigation into the cause of increases in shipping prices at a time of decreased demand and increased industry capacity.  At that time, the European Commission said it suspected 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.”

In 2013, the European Commission opened formal antitrust proceedings against 14 of the world’s biggest container shipping firms in Europe and Asia.  The Commission was particularly concerned that the public announcement of new prices enabled companies to signal future price intentions to each other, which led to higher prices for container liner shipping transport services on routes to and from Europe.

Reuters has reported that the shipping companies under investigation are looking for a settlement with the European Commission.  Sources indicated that the major industry players are ready to “offer concessions to allay competition concerns under the Commission’s commitment procedure.”

If the Commission accepts commitments, it will adopt a decision making the concessions binding on the parties.  However, a commitment decision is always rendered without establishing an infringement or imposing fines.  Thus, resolution through the commitment procedure could leave open questions regarding the legality of the shipping industry’s practice of making advance announcements of price increases.  Some observers expect the Commission’s ultimate decision to be published in October, just before Competition Commissioner Joaquin Almunia ends his term as the European Union’s antitrust czar.

Edited by Gary J. Malone

Tagged in: Antitrust Enforcement, International Competition Issues,