The Competition and Markets Authority will not recommend renewing
a ‘block exemption’, which provides an exemption from competition
law for certain forms of cooperation between liner shipping
companies.
The decision follows feedback submitted to the Competition and
Markets Authority (CMA) from shipping companies, their customers
and representative trade bodies after it consulted the sector
last year.
What is a block exemption?
It provides an exemption from competition law for a particular
category of agreement between businesses. Block exemptions are
generally made when the agreements in question are unlikely to
breach competition law, and there is a value or benefit in
providing legal certainty.
Background
The Liner Shipping Consortia Block Exemption Regulation (CBER)
was introduced by the European Commission in 2009. It was
retained into UK law at the end of 2020, when the UK left the EU,
and is due to expire in April 2024.
The CMA has a role in recommending new block exemptions to
government. With the CBER expiring in April 2024, the CMA has
considered whether to recommend a new UK block exemption to
replace it.
Findings and decision
The CBER covers certain forms of cooperation between liner
shipping companies, called ‘consortia’. Cooperation between
shipping companies through consortia can bring benefits, but it
can also reduce competition between them, which can weaken their
incentives to keep charges competitive and improve service
standards.
As part of the CMA’s consultation with the industry, it received
feedback from some customers of liner shipping companies that
they are not seeing the benefits from companies participating in
consortia, including concerns about charges and service quality.
It may be the case that particular consortia can be justified
when looked at individually, and allowed under competition law.
But the CMA’s view is that they should not benefit from the
automatic exemption, which a block exemption offers. The CMA
has therefore decided not to recommend a new block exemption to
replace the existing CBER.
In reaching this decision, the CMA has also taken into account 2
additional factors:
First, many liner shipping companies already have to self-assess
their consortia because their combined market share exceeds the
thresholds allowed under the block exemption.
Secondly, liner shipping services to the UK currently call at
ports in the EU as part of the same overall service. Liners
operating these services will also need to consider compliance
with EU competition law, following the EU’s decision to let its
own block exemption lapse, alongside needing to consider
compliance with UK competition law. Given that no automatic
exemption will apply in the EU, the value of an automatic
exemption under UK law is therefore significantly reduced.
More information is available on the CMA’s case
page.
Noted to editors
- The EU Liner Shipping Consortia Block Exemption Regulation
was retained in UK law when the UK left the EU and became
assimilated law with effect from 1 January 2024. It is due to
expire in April 2024.
- In November 2023, the CMA consulted on a provisional decision
that it would not recommend replacement of the CBER. The CMA has
considered the feedback received before reaching its final
decision. Reponses to the CMA’s provisional decision have been
published on the CMA’s case page, and a summary of responses is
included in the final decision.
