Dispute over EU decision on alliances: shipowners back London

Caption: © Scheer

After the EU overturned the “block exemption regulation”, shipowners are now relying on support from the UK.

The World Shipping Council, which represents liner shipping companies, has made an appeal to the UK and is urging London to deviate from the EU, as reported by the Financial Times (FT).

The background to the initiative is the European Commission’s decision not to extend the Block Exemption Regulation – an exemption in competition law for cooperations and alliances between liner shipping companies. The decision was immediately followed by criticism from the WSC, which fears, among other things, significant uncertainty for shipping companies. Other players in the industry, including parts of the port industry, had been calling for the regulation to be scrapped for some time.

Now, according to the FT, the shipowners’ organization has written to the UK competition authority calling on the UK to act as a “sovereign nation” after Brexit and to maintain the exemption from competition rules that some shipowners enjoy under UK law.

The EU’s decision to abolish the Consortia Block Exemption Regulation (BER), which allowed shipping companies to cut costs by sharing ships, from April next year had put pressure on container shipping companies. Their revenues had already collapsed as a result of the declining trade volume in the wake of the global economic downturn – albeit from a high level.

Shipowners: EU decision “deeply flawed”

In a joint letter, the WSC and the Asian Shipowners’ Association have informed the Competition and Markets Authority that the EU’s findings are “deeply flawed” and “untenable”.

Since leaving the EU, the UK has maintained the exemption from EU antitrust rules for shipping consortia with a market share of less than 30%. However, this exemption expires in April and the authority plans to make a recommendation to the government on whether or not it should be extended.

WSC and ASA said it was “incoherent and irrational” for the EU to use the pandemic and the lines’ very high profits to justify its decision.
“It is well established that the increased freight rates and deterioration of services during the pandemic were the temporary result of exceptional market forces,” they wrote. Furthermore, consortia are essential to the fight against climate change as they reduce emissions by increasing operational efficiency.

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