9 November 2007
The JSA Comments on the Draft Guidelines
on the application of Article 81 of the EC Treaty to maritime transport services
With reference to the Draft Guidelines on the application of Article 81 of the EC Treaty tomaritime transport services‐hereinafter referred to as the “Draft Guidelines”, the Japanese
Shipowners’ Association (JSA) respectfully submits its comments as follows:
1. General statement
The shipping business has a unique character. A shipping company may transport cargoeson their ships or may charter out its ships to other shipping companies who will thentransport them: i.e. shipping companies are not always natural competitors; quite frequently
they may become customers of other shipping companies.
The types of contracts that shipping companies make with other shipping companies may
be varied: Bill of Lading, Voyage Charter (V/C), Periodical Time Charter, Trip Time Charter,Space Charter, Bareboat Charter, Pool Agreement, Consortium Agreement and theircombinations. Charter markets such as Time Charter, V/C, Spot and Contract ofAffreightment are, to some extent, interrelated.
These situations show that the nature of shipping contracts and the relationships between
shipping companies are rather complex. Given the context of the EU competition law, it isunderstandable that the Draft Guidelines that the actual or potential effects of an informationexchange must be considered on a case-by-case basis, and that each pool must also beassessed on a case-by-case basis. However, a case-by-case based assessment creates
serious uncertainty and ambiguity, resulting in shipping companies being unable to makeself assessments regarding their information exchange and formation of/participation inhorizontal agreements like pool agreements.
In this regard, the JSA respectfully requests that:- the Guidelines, which are scheduled to be published sometime before October 2008,
should provide clearer criteria for lawful information exchanges and horizontal agreements,
by which shipping companies can easily self-assess their information exchanges and/or
the horizontal agreements in which they will participate;- that the Commission should set up a prior consultation mechanism where shipping
companies could, when needed, ask the Commission whether certain future activities ofshipping companies are considered to be lawful or not.

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2. Liner shipping
The JSA welcomes the removal of the unwarranted reference to collusion that appeared in
the Issues Paper of 29 September 2006. As mentioned in our previous submission inOctober 2006, the liner shipping market is highly competitive. Furthermore, carriers havecomplied with the laws and regulations in the past, and will continue to do so in the future.
The JSA strongly believes that the information exchange system is essential for themanagement of the industry. It ensures accurate forecasts of supply and demand, which istruly helpful to shipping companies in avoiding unproductive investment and service
decisions. By promoting better decision making, we believe it is also beneficial for shippers.
It is therefore certainly welcomed that the Commission grants information exchange
between carriers after the repeal of Regulation 4056/86. However, there is still much
uncertainty in the Draft Guidelines that is open to interpretation, and this could leave
shipping companies to be at risk of breaching the rules through no fault of their own. For
instance, the Draft Guidelines set a number of parameters, such as market structure,
type/characteristics/frequency of information exchanged and aggregation of data.
However, the Draft Guidelines do not specifically state how these factors are to be weighed.
Instead, it is mentioned that the actual or potential effects of an information exchange to themarket are to be considered on a case-by-case basis. Furthermore, although the Draft
Guidelines stipulate that exchanges of historic data on volume and capacity are unlikely torestrict competition and that the historic or recent nature of the information should beassessed with some flexibility, we are uncertain what sort of information could be interpretedby the Commission as “historic”.
The JSA therefore fully endorses the comments submitted by the European Liner Affairs
Association (ELAA) that the European Commission is required to clarify the criteria, underwhich information exchange is allowed, in the Guidelines.
3. Tramp shipping
The JSA recognises that tramp pools are set up to allow participants to provide service
levels that their major customers increasingly demand and that they also contribute toachieve more effective fleet deployment for many years. Tramp pools are operated in anenvironment of supply and demand where contracts are concluded based on tenders, rates
are therefore driven to a large extent by a spot market and brokers play an important role.
Customers enter into contracts with pools with due recognition that the pool system is a kind-2-

of joint venture which is definitely different from cartels. The fact that – to JSA’s knowledge– there have not been complaints from charterers bolsters the view that tramp pools are not
only meeting the needs and requirements of charterers but are also in compliance with theEC law.

Pool agreements usually involve companies combining assets and services for a

specified period of time and are not permanent, as is the case in merged companies. The
regulatory conditions for pool agreements should be more relaxed than for mergers or fullfunction joint ventures. Pools should be exempted under Article 81(3) if they improvetransport services or promote technical/economic efficiencies.
The JSA welcomes that the Draft Guidelines consider that tramp shipping pools are per se
not in conflict with the EC competition law, whilst recognising that each pool must be
assessed on a case-by-case basis. As the Draft Guidelines lack clear guidance, inparticular on carrying out a self-assessment of lawful tramp pools under Article 81(3),shipping companies may hesitate to set up or participate in a pool which brings about
benefits of economic efficiency. The JSA therefore requests the Commission to lay down
more specific criteria on Article 81(3) with regard to shipping. The clarity of the Guidelines
on joint bidding would be helpful for shipping companies in constituting a consortium forbidding or tendering a project.
The JSA believes that any reference to “price fixing” as a characteristic of pool functioning(and hence as a hardcore restriction of competition) cannot be sustained in the Guidelines
as the agreement of the price between the pool manager and the customer is an inherent
part of the service being offered.
Finally, the JSA is of the opinion that the Guidelines on the information exchange are also
indicative for non-liner shipping as clear criteria of lawful information would be helpful tothose engaged in all sectors of the shipping industry, both in liner and tramp business.

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