Press release

The European Shippers' Council has strongly welcomed the findings of a recently published regulatory impact assessment on the application of competition rules to liner shipping.

The report, produced by the consultancy firm Global Insight, for the European Commission's Competition Directorate General, provides an independent and impartial opinion on the consequences of repealing the competition block exemption regulation (4056/86) that has for the past 17 years allowed liner shipping companies to operate within cartels or 'conferences' on the container shipping lanes to and from the European Union.

Members of the European Shippers' Council yesterday (9 November, 2005) discussed the report, concluding that it represented a complete endorsement of everything the ESC had previously argued as to the negative effects of the liner conference system and the benefits that would ensue from its repeal.

Nicolette van der Jagt, Secretary General of the ESC said 'This report shows that everyone wins from a repeal of the block exemption, shippers, ocean carriers and consumers alike. We should not be surprised that an independent assessment should conclude that removing a cartel would result in price reductions, greater efficiency in the industry, better services and greater competition. What will be more surprising to many onlookers is that, in the 21st century, it is even necessary to debate whether a cartel should exist; one would have thought that by now Member States and our politicians would be embarrassed by the mere existence of any legalised cartels operating within an otherwise free market economy.

'The report should satisfy many MEPs that recently voiced concern for small and medium sized enterprises and developing countries that they thought might suffer if the protectionist policy were allowed to be repealed with nothing to replace it. Their minds can be put to rest on such matters: the report concludes that all SMEs – carriers and customers, and less developed countries would be better off without liner shipping conferences. It also completely rejects the package of measures the liner shipping sector put forward to replace it – describing these proposals as a “super-conference”.

Nicolette van der Jagt added “It has been suggested in a number of trade press articles recently that by signalling a willingness to discuss issues and initiatives that might improve service performance and quality, that this somehow indicates a willingness to support the ideas and proposals being put forward by the lines to replace the conference system. Such is the strength of feeling among members over this misinterpretation of their intentions that it has become necessary to re-state precisely ESC's p sition over future dialogue with the shipping lines and show that there has been no change in our position:

we support 100 per cent the repeal of regulation 4056/86;
we reject any form of collective surcharge setting or common calculation by the lines – however transparent they claim it is. Fuel costs, currency fluctuations, terminal handling costs, security costs and so on, are part of everyday operational costs; surcharges are for extraordinary, unforeseen cost increases and implemented only with the expressed agreement of the lines' individual customers;
we reject the need or benefit of a price index, not least because it would establish a benchmark for rate negotiations irrespective of the type of service being offered;
we cannot accept the role of trade committees, forums or associations that are established to interpret market and vessel capacity information with a view to determining and agreeing commercial practices of shipping lines.”

The ESC member councils represent in excess of 100,000 companies throughout Europe generating somewhere in the region of 90 per cent of the EU's international maritime traffic.

For further information contact: Nicolette van der Jagt, Secretary General of the ESC - Brussels 00 322 230 2113