Saturday , 21 July 2018
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South Africa blocks merger between Japanese carriers
NYK Line would hold a 38% stake in the new JV

South Africa blocks merger between Japanese carriers

The Competition Commission of South Africa (CCSA) has prohibited a proposed merger between Nippon Yusen Kabushiki Kaisha (NYK Line), Mitsui O.S.K. Lines Ltd (MOL) and Kawasaki Kisen Kaisha Ltd (K Line).

The three Japanese carriers had hoped to begin operations of their new joint venture (JV), known as Ocean Network Express, in April 2018, provided that all anti-trust reviews are completed.

The establishment of the JV, if approved, will integrate the three companies’ container shipping businesses (including worldwide terminal operation businesses, excluding those in Japan).

The Commission is of the view that this proposed merge is likely to increase the scope for collusive conduct in the container liner shipping market, while creating a platform for coordination in the car carrier market.

A statement from the regulator noted: “The merger increases the likelihood of coordination as it creates further structural linkages in the container liner market.”

The Commission also found that the proposed transaction creates a platform for coordination in the car carriers market which, it said, has a history of collusion involving the merging parties.

The CCSA’s statement added: “It is the Commission’s view that the merging parties may require a formal mechanism for the further collusive conduct in the car carriers market. The joint venture provides such a mechanism.”

In the CCSA’s opinion, “there are no efficiencies that outweigh the anticompetitive effects of this transaction and that there are also no remedies sufficient to address these effects.”

The Commission also decided that “there are no public interest issues that could outweigh the anticompetitive effects arising from the proposed transaction.”

Establishment of a holding company for the JV is currently planned in Japan, and an operating company is planned to be incorporated in Singapore.

In addition, regional headquarters of the operating company will be set up in Singapore, Hong Kong, United Kingdom (London), United States (Richmond, VA), and Brazil (Sao Paulo).