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Maritime stakeholders call for EU to re-evaluate liner block exemption

Maritime stakeholders call for EU to re-evaluate liner block exemption

A number of stakeholders in the maritime supply chain have called for proper objective evaluation of the European Commission’s Consortia Block Exemption Regulation (CBER), which makes container shipping exempt from the EU’s competition laws.

LECAT, ETA, EBU, ESC, FEPORT, GSF, GSA and UIRR representing users of liner shipping services and service providers of the maritime logistics chain jointly object to the prolongation of CBER.

The groups argue that the Commission has failed to demonstrate that the renewal of the regulation without modifications would benefit transportation users and service providers, instead claiming that quality and choice have reduced over the last years.

They believe that the regulation marks a “a disproportionate and excessively liberal concession from normal competition rules” and that the proposed four year extension “could cause serious and irreparable harm to the European maritime logistics sector”.

In a statement, they noted: “Not only has the Commission largely dismissed the views of the users, operators and service providers in the supply chain, who all responded to the original consultation in 2018; the associations all share the view that there are many legal flaws in the arguments put forward by the Commission.

“These flaws relate to many issues – missing data, one-sided assumptions on efficiency gains disregarding non-rate related parameters, lack of a proper definition of relevant geographic markets to assess market shares and a complete failure to identify remaining benefits to users if the CBER would be continued.”

The associations, which are exploring all possible legal options, cited a legal analysis of the Commission’s Staff Working Document Report (SWD) from November 2019.

They claimed that the Commission has not obtained the relevant price and market share data to review the CBER in light of light of the major developments in the industry since the last review in 2014.

The organisations stated: “Without adequate explanation, the SWD has wrongly excluded alliances from the evaluation of the CBER. Alliances have through investment in ultra-large container vessels (ULCVs) – largely changed the economics of international liner shipping, which in turn has changed cost structures for logistics and infrastructure providers.

“It is disturbing that the Commission SWD concludes that Alliances are irrelevant to its evaluation of the CBER because two of the alliances fall outside the 30% market share threshold on certain trades.”

The groups also believe that the evaluation criteria is biased in favour of carriers, judged the regulation’s benefits on its ability to make life easier for carriers and administratively simpler for the Commission, while ignoring the effect this has on European importers and exporters.

The associations added: “The Commission has not recognised, despite the evidence provided in the relevant International Transport Forum (ITF) reports that the reduced possibility of costs rationalisation has resulted in a continuous deterioration in the quality of service and in an abuse of power due to their dominant role towards service providers within the logistic chain and therefore an erosion rather than increase in economic benefits to share with users and consumers. ”

The groups also asserted that the Commission has not analysed the impact of liner shipping consortia on port operations and landside transportation.

They stated: “The landscape of the liner shipping industry has changed in the sense that carriers do not limit their services to port-to-port services but door-to-door; they also exchange data on services which relate to the port and land side which is made easier with developments in the area of big data and business intelligence and analytics – all of this not available to the liner shipping industry at the time of previous reviews of the BER.”