21 November 2008
JSA Comments on the Preliminary Draft Regulation on Consortia
The Japanese Shipowners’ Association (JSA), which is a nationwide
shipowners’ association consisting of 109 Japanese shipping companies,appreciates this opportunity to submit to the European Commission thefollowing comments on the Preliminary Draft Regulation “on the application ofArticle 81 (3) of the Treaty to certain categories of agreements, decisions andconcerted practices between liner shipping companies (consortia)” (hereafterreferred to as “Draft Regulation”) published in the Official Journal of theEuropean Union of 21 October 2008.
The JSA recognises that the consortia system is purely operationalarrangement and it is not involved with any commercial discussion of such asrates or charges. The concept of consortia is universally accepted in major
trading countries and regions as effective means to significantly improve theproductivity and quality of maritime transport services through the joint
operation. We firmly believe that the block exemption for consortia is essential
to support the sustainable world trade and to flexibly meet changing customers’requirements. It is therefore important to retain legal certainty to assure thecurrent consortia system for the foreseeable future.
1. Market share
According to the Recital (4) of the Draft Regulation, agreements between
different consortia operating in the same trade do not seem to be covered by
the Consortia Regulation, regardless of their market shares. It means that thesaid agreements are directly subject to the EC Treaty. Given that the aim ofsuch agreements is not to reduce competition among consortia, which should
be prevented by the Regulation, but to rationalise services in trades in response
to fluctuations in supply and demand and to provide stable services to meetcustomers’ demand, the JSA is of the opinion that agreements between different
consortia should not fall under the category of “restrictive agreements”. We
would like to request that this type of agreements also be covered by theRegulation.
Furthermore, we also have a grave concern about the aggregation of themarket shares of carriers and consortia in Article 5 of the Draft Regulation. Itstates that “the market shares of carriers that provide services both individuallyand within a consortium on the same relevant market have to be aggregated”
and that “market shares of consortia operating in the same relevant market andinterlinked by common membership have to be aggregated”. The liner shipping
companies have established many links between consortia, or between
individual members of consortia and other carriers in order to cope withchanging requirements of the trades and business. If the market shares werecalculated in the proposed manner, it might easily exceed the proposed
threshold of 30% in many cases and it could consequently impose implicit
restrictions on the ability of carriers and consortia to consider exchanging small
slots flexibly with other carriers and consortia for the purpose of the efficient use
of vessel capacity. It could also create a serious obstacle to providing a varietyof choices of services for customers.
2. Consultations with shippers
In case of major changes in conditions and quality of scheduled maritime
transport services offered by a consortium or its members, consultations
between individual members of a consortium and their shippers take place
under the current practice. With regard to Article 7 of the Draft Regulation (andalso in Regulation 823/2000), which imposes an obligation to hold consultations
between a consortium and shippers or their representatives, we understand thatArticle 7 will not affect the present consultation practice between individual
carriers and their customers, as the current regulation allows.
We would like to reiterate the fact that agreements being entered into by aconsortium are not involving any commercial discussion. If Article 7 implies thata consortium is allowed to gather to discuss in preparation for consultations with
its customers, it could contradict with the basic principle of Article 3 (Exemptedagreements) in the Draft Regulation.
3. Conclusion
The JSA are pleased to note that the Commission recognises that Regulation
823/2000 is found to work well for the benefit of carriers and transport users andproposes to extend the exemption for consortia agreements for another periodof five years.
The JSA firmly believes that, as mentioned above, the block exemption forconsortia is essential to provide high quality scheduled maritime services and tomeet the needs of a large variety of shippers. The JSA strongly requests that
the EU block exemption regulation for consortia should be maintained for amuch longer term.
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