European Commission closes competition case into 14 carriers

European Commission closes competition case into 14 carriers
The European Commission opened the investigation in November 2013

The European Commission (EC) has rendered legally binding commitments by 14 of the biggest shipping lines to reform the way they announce price changes following closure of a competition case into them.

The adopted decision is the result of formal antitrust proceedings opened by the EC in 2013 to investigate the practice of publishing General Rate Increase (GRI) announcements.

GRI announcements are defined as statements of intended changes to the price expressed exclusively as an amount or percentage of the change.

In response to the opening of the investigation, carriers made several commitments in February 2016, including agreeing to stop publishing and communicating GRI announcements.

The commitments will be legally binding on the carriers for three years starting from December 7, 2016.

The fourteen carriers which regularly announced their intended future increases of freight prices are CMA CGM, COSCO, Evergreen, Hamburg Süd, Hanjin, Hapag Lloyd, HMM, Maersk, MOL, MSC, NYK, OOCL, UASC and ZIM.

The EC had expressed concerns that the companies’ practice of publishing their intentions on future price increases may have harmed competition and customers.

The EC thought that this practice may have raised prices on the market for container liner shipping services on routes to and from Europe, in breach of EU antitrust rules.

According an EC statement, there were concerns that GRI announcements “do not provide full information on new prices to customers but merely allow carriers to be aware of each other’s pricing intentions and may make it possible for them to coordinate their behaviour”.

“Because the announcements provide only partial information to customers, and may not be binding on the carriers, customers may not be able to rely on them and therefore carriers may be able to adjust prices without the risk of losing customers,” the EC added in a statement.

Other commitments now legally binding comprise announcing figures that include at least the five main elements of the total price and making price announcements within 31 days before their entry into force.

Additionally, price announcements will be binding on the carriers as maximum prices for the announced period of validity, but carriers will remain free to offer lower prices.

According to the EC, the commitments “will increase price transparency for customers and reduce the likelihood of concerted price signaling by binding the carriers to the prices announced”.

The original investigation opened in 2013 included China Shipping, but since the company was then restructured and exited the business, it was not necessary for it to offer commitments in February.

Camilla Jain Holtse, Chief Legal Counsel on competition compliance in Maersk Line, said in a statement following the decision: “We are very pleased that the EU Commission has closed the case without finding an infringement of EU competition law.

“We and the other shipping companies have throughout declared that we have not engaged in any practices that contravene EU competition law.”