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Sunday, August 25, 2019
Sea Breezes, April 2019

Taken on trust or anti-trust?

Late February brought the news that some major shipping companies such as Maersk, MSC and Hapag-Lloyd had been cleared by competition authorities in the US following an investigation that had started back in 2017.

The Antitrust Division of the US Justice Department had become concerned following the creation of two new shipping alliances with global reach – THE Alliance and the Ocean Alliance. The latter, for example, involved such prominent companies as Evergreen Line, China Cosco Shipping and OOCL.

Together, these two alliances were set to control over 45% of the global container shipping market, giving rise to concerns about anticompetitive behaviour, and a particular fear that the collaboration between the companies over vessel and slot-sharing would be so extensive as to dramatically reduce competition in the market. As a result, a number of s

enior executives from across these corporate giants were subpoenaed to give evidence. While understanding the need for the major competition authorities (particularly in the US, China and European Union) to scrutinise such activity, it is also important to acknowledge the practical need for co-operation between such companies, especially to manage overcapacity in what is a very cyclical sector often affected by varying patterns and downturns in world trade.

Looking back at a paper drawn up by EU officials on this issue back in 2015, I was intrigued to note that in the two preceding years, the number of shipping alliances had doubled and that 80% of the top 20 players in the world of container shipping were part of one of these alliances. This is not unlike the aviation industry where virtually all major airlines are part of one of three international alliances (One World, Star Alliance and Skyteam), allowing for close co-operation in technical, operational and sales aspects.

Competition law is not a straightforward matter and I guess the question is whether such co-operation between shipping companies can be taken on trust as a justifiable and logical step, particularly in the age of globalisation and with the need to offer the best possible options to customers, or whether such alliances can over-step the mark into the thorny areas of price setting and reducing competition in the market.

Where such alliances allow some degree of consolidation of capacity during difficult economic periods, one would think that from an environmental standpoint, they would meet another important aspect of many governments’ policy agendas – rationalising fleet schedules should help to reduce greenhouse gases and aid compliance with the emission targets set for the shipping sector.

Whatever way you look at it, competition law is one of the most complex aspects of the modern maritime world.

HAMISH ROSS, EDITOR

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