1.2 Legal framework
Historically, competition regulation in maritime transport has seen continuous evolvement. Until the implementation of the “1986 Package”, the Commission lacked procedural tools to investigate any competition law concerns in the maritime industry.(1) Van Bael & Bellis (2021) pp.1451-1452. With Regulation 4056/86, the EU competition rules were implemented in maritime transport. Further, through Regulation 1/2003, the procedural provisions of Reg 4056/86 were repealed, resulting in general application of Art. 101 to the sector.(2) Regulation 1/2003 art.32, 38 and 43.
Art. 101 is structured by prohibiting cooperation which restricts competition under Art. 101 (1), by declaring such agreements or practices void under Art. 101 (2), and by exempting certain practices which produce efficiencies under Art. 101 (3). Efficiencies in liner shipping, in addition to facilitating effective global trade, include improved stability, predictability and quality of transport services, benefitting not only shippers sending their cargo, but also individuals and businesses as consumers. These are some of the considerations justifying BERs in liner shipping, as EU regulators assume that certain forms of cooperation produce efficiencies outweighing their restriction on competition, in accordance with Art. 101 (3).
The liner shipping sector has seen two BERs. The first of 1986 (Conference BER) provided the option for carriers to engage in so-called “conference” agreements, fixing freight rates and other conditions of carriage.(3) Regulation 4056/86 see particularly art.1 and 3. The regulation reduced competition particularly on prices, and allowed, under certain conditions, competing carriers to allocate cargo and coordinate shipping timetables, carrying capacities, and sailing frequencies.(4) Ibid. art.3.
Liner conferences were exempted under the notion that they have a stabilizing effect on the market and thus assure shippers of reliable services. Furthermore, they contribute to efficient scheduled transport services, in the interests of consumers.(5) Ibid. p.1. The Conference BER enabled cooperation on central parameters of competition and was in 2006 repealed with effect from 2008,(6) Regulation 1419/2006 art.1. only to be replaced by the Consortia BER.(7) Regulation 906/2009 para.15. The current legal framework consists of Art. 101 applying in full, accompanied by the Consortia BER.(8) Van Bael & Bellis (2021) p.1453. Accordingly, case law from all industries is relevant when interpreting Art. 101.
Consortia BER exempts sets of agreements having the object of cooperating in joint operations of liner services, provided they improve the services offered and rationalise the operations through technical, operational, or commercial arrangements.(9) Regulation 906/2009 art.2 No 1. Central activities include the joint operation of sailing timetables and port terminals, as well as slot-exchanges between vessels and pooling of vessels. Additionally, capacity adjustments in response to fluctuations in supply and demand are allowed, in addition to other ancillary activities necessary for implementing the joint operations, for instance the use of a computerised data exchange system.(10) Ibid. art.3.
The broad definition of “consortia” in article 2, and the various activities explicitly exempted in article 3, intend to cover a wide range of cooperative arrangements in the sector.(11) Van Bael & Bellis (2021) p.1454. The Consortia BER is justified by pointing to improved productivity and quality of liner services, rationalisation of activities, economies of scale, and better utilisation of containers.(12) Regulation 936/2009 para.5. Upon its date of expiry, the liner consortia BER was extended first in 2014,(13) Regulation 697/2014 art.1 and again in 2020, making it applicable until 2024.(14) Regulation 2020/436 art.1
Despite the Consortia BER, traditional and recent forms of cooperation in liner shipping may be at conflict with EU competition rules. One main objective of the EU is to establish an internal market and ensure a highly competitive social market economy.(15) TEU art.3. Within this lies the aim of protecting the competitive structures of the market and competition in general.(16) Cases C-501/06 P GlaxoSmithKline Services Unlimited and Others v Commission (GlaxoSmithKline)para.63. Additionally, competition rules aim at protecting consumer welfare.(17)Case 6/72 Europemballage and Continental Can v Commission para.26. In liner shipping, these objectives should ideally ensure a market where different carriers genuinely compete to offer shippers the best terms on price, quality and quantity of their services. Extensive sharing of information between competitors may, however, allow carriers to reduce competition on these parameters, potentially requiring customers, and ultimately consumers, to pay a higher price for a reduced supply of maritime transport services.