Where's the trust?
European Commission investigations into price fixing could mean other companies find themselves subject to unwelcome probes
Ports should be watching the latest round of European anti-trust raids with interest.
Companies in the EC’s sights include NOL, OOIL, Evergreen, Hanjin, Maersk, CMA CGM and Hamburg Sud, all of which are vehemently denying any such charge.
The shipping line raids follow on from the classification society probe back in 2008, where Det Norske Veritas, Bureau Veritas, Lloyd’s Register, and the sector’s association, the International Association of Classification Societies (IACS), were investigated on suspicion of breaking EU antitrust rules.
In both cases, the commission were looking for alleged “restrictive business practices”, or cartels to you and I.
So where’s the smoke? Well, presumably vessel sharing arrangements will have raised some EC eyebrows. Maersk has vessel-sharing agreements with CMA CGM and Mediterranean Shipping Co, which allow one carrier to buy space on competitors’ ships to reduce costs. Maersk and CMA CGM are also both members of the Transpacific Stabilization Agreement, which have the noble aim of working to “develop voluntary, non-binding guidelines for rates and charges”. Other carriers have similar agreements in Europe.
For ports, these raids should ring at least two alarm bells. Firstly, if lines are found to be in breach of European anti-trust regulations – and it’s still a big if – then that could change the face of liner operating in Europe for good. Out with vessel sharing and any collaboration between carriers, in with ‘every man for himself’ mentality and a resultant destabilisation of rates. In this shaky recovery period, some lines will make it, some won’t – will your port count the winners or losers as clients?
Secondly, where should our industry draw the line when it comes to discussing business with competitors? Are Memorandums of Understandings on business practices allowed between European ports? What about regional port associations, would they pass the test? And while we think about that, should we ask if ESPO is safe?
Perhaps, just to be sure, we should we stop conference attendance if there’s an outside chance that we might run into a colleague in a rival European port.
It’s not that we advocate anti-competitive behaviour – far from it – but it would be useful to have some direction from the EC on their version of ‘anti-competitive’. The class society raids forced IACS to adopt non-discriminatory membership criteria and to open the trade body's technical working groups to competitors. The shipping line raids could mark the end of vessel sharing agreements. Ask yourself what impact a similar raid might have on European port operations and prepare for the worst.
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