Press Release
ESC welcomes OECD report condemning price-fixing liner cartels
18 April 2002
The Organisation for Economic Co-operation and Development (OECD) has published
its long-awaited report on maritime competition policy. In an extensive and cogently
argued report the OECD unambiguously recommends the termination of price-fixing
arrangements in the liner shipping market and urges OECD Governments to review
anti-trust immunity for rate fixing. The report delivers yet another blow to the
increasingly discredited and unacceptable practices of liner shipping conferences.
It follows hot on the heals of the recent dismissal of court appeals against European
Commission rulings which condemned the legality of practices by the former Trans
Atlantic Agreement and the Far Eastern Freight Conference during the 1990s.
ESC supports the OECD report’s call for an end to antitrust exemptions covering
price-fixing, freight rate negotiations and trade wide discussion agreements,
despite the avalanche of predictable protests from shipowner representatives.
The OECD report recommends that “Liner shipping should no longer be granted antitrust
immunity for price fixing and freight rate discussions as there is no convincing
evidence that these practices offer more benefits than costs to shippers”.
Reacting to the report ESC Chairman Dick van den Broek Humpreij said ‘We fully
support the position adopted by the OECD and welcome the fact that the European
Commission is taking the OECD recommendations seriously. The Commission has effectively
recognised that following a fifteen year period since implementation of the liner
conference block exemption it is now appropriate to review the Regulation in light
of current regulatory and trading conditions. We look forward to working constructively
with the European Commission in its examination into the justification for liner
shipping exemptions.
Mr Humpreij added “We very much hope the report will form the basis of discussions
with the liner shipping industry about the future commercial and regulatory structure
of the industry. The OECD report rightly recognises that close co-operation and
partnership between customer and supplier is the way to do business in the future.
This is reflected in the increasing usage of individual and confidential contracting
between customers and suppliers.” ESC believes that a restructuring of the liner
shipping industry is long overdue. Such a restructuring should focus on encouraging
a framework that promotes good customer- supplier relationships and enhanced supply
chain and economic efficiency.
Some background
The OECD has undertaken a broad review of regulatory reform in a number of economic
sectors to improve the efficiency of national economies and their ability to adapt
to changes in order to remain competitive. In May 2000 a draft Secretariat report
was considered by a joint workshop of the Maritime Transport Committee and the
Competition Law and Policy Committee. Representatives from maritime regulators,
competition authorities, shipowners and shippers exchanged views on the report;
in particular on the section that dealt with competition policy aspects of regulatory
reform. A draft version of the final report was published last November and followed
by a workshop in December 2001 in Paris. This report said that 1) liner shipping
industry is not ‘unique’ in the sense that its cost structure does not differ
substantially from that of other transport industries and shipping lines do not
suffer from exceptionally low returns on investments when compared to other scheduled
transport providers. 2) There is no evidence that the conference system leads
to more stable freight rates or more reliable shipping services than would be
the case in a fully competitive market. No substantial change in the report has
been made.
The 87-page report, Competition Policy in Liner Shipping is available on line
at http://www.oecd.org
For further information contact: Nicolette van der Jagt, Secretary General of the ESC - Brussels 00 322 230 2113
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