EN Official Journal of the European Union C 204/43

Opinion of the European Economic and Social Committee on the Guidelines on the application of Article 81 of the EC Treaty to maritime transport services (Additional Opinion)

(2008/C 204/11)

On 20 November 2007, the Bureau of the European Economic and Social Committee, under Rule 29 A of the Implementing provision of Rules of Procedure, decided to draw up an additional opinion on the

Guidelines on the application of Article 81 of the EC Treaty to maritime transport services.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 19 February 2008. The rapporteur was Dr Bredima.

At its 443rd plenary session, held on 12 and 13 March 2008 (meeting of 12 March), the European Economic and Social Committee adopted the following opinion by 117 votes with 6 abstentions.

1. Conclusions

1.1 The EESC believes that the structure and the current wording of the draft Guidelines can for the most part be endorsed. However, it notes a difference in details between the chapters on liner shipping and tramp shipping (pools). The section on information exchanges in the liner shipping chapter is fairly detailed and seems to be relatively helpful in terms of describing and interpreting relevant case law and decision-making practice on the subject. Overall, the draft Guidelines for liner services seem clear and are based on existing case law and long, thorough discussions with the industry. On the other hand, the sections on tramp shipping in general and tramp shipping pools in particular are less detailed. The EESC presumes that this lack of detail is to a large extent due to an absence of case law and therefore of experience of the relevant (competition) authorities, including the European Commission, regarding tramp shipping and tramp shipping pools as there have been no formal complaints from charterers as yet.

1.2 The EESC reiterates its calls in earlier Opinions (2004, 2006, 2007) for the EU to enter into meaningful consultations with other jurisdictions with a view to determining the compatibility between existing regimes governing liner trades worldwide. Furthermore, the EESC reiterates its recommendation in the same Opinions that the European Commission should also take the human resources aspect (e.g. impact on employment for European seafarers) into consideration — in addition to purely competitive factors — when dealing with competition rules with regard to maritime transport.

1.3 The EESC suggests using illustrative examples to specify the content of the (draft) Guidelines dealing with liner shipping, particularly where data are considered ‘historic’.

1.4 As the sections dealing with tramp shipping and tramp shipping pools are less detailed for the reasons presumed above, the EESC wonders whether they will be sufficient enough to provide tramp (pool) operators with the required guidance to carry out a self-assessment of the cooperation agreements in which they are involved. It is possible that some greater clarity on certain sections of the draft Guidelines dealing with tramp shipping (pools) may be needed. Equally, it may be worth considering extending the consortia Regulation, which is specifically limited to container trades at the moment, to cover other relevant segments of the global shipping market as well.

1.5 The EESC stresses that shipping pools do not constitute the majority of the tramp shipping markets. Indeed, the vast majority of tramp vessel services are operated by many small or medium sized companies that compete with each other for cargo. For this reason, the EESC maintains that specific clarification in the Guidelines acknowledging this point is required. Moreover, the European Commission should also have given more guidance on the application of the de minimis rule to pools that are too small to have any appreciable effect on their markets.

1.6 It is disappointing that the guidance given on tramp shipping pools does not entirely answer the questions that are causing uncertainty and even concern for tramp pool operators. The EESC agrees with the perception that can be inferred from the draft Guidelines that tramp shipping pools are per se not in conflict with EC competition law but it urges the European Commission to give more specific guidance in the final version of the Guidelines regarding application of Article 81(3) to tramp shipping pools to provide the necessary tools to carry out self-assessments.

1.7 It is noteworthy that the draft Guidelines do not define what they mean by ‘tramp shipping’ and it is therefore not clear whether they apply also to maritime passenger transport and/or to specialised shipping. It might be worth considering clarification on this point as well.

1.8 Moreover, with regard to the tramp shipping chapter, the EESC suggests that the Guidelines clarify that a shipbroker's activities do not essentially differ from the activities of a pool manager with regard to setting prices. Tramp shipping markets, including those within which tramp shipping pools are operating, are bidding markets, i.e. prices are determined between price-negotiating parties and are based on supply and demand. The mere fact that a pool manager agrees a price with a charterer for use of a pool vessel does not therefore constitute ‘price fixing’ as a hardcore restriction.

2. Introduction

2.1 On 13 September 2007 the European Commission published its long-awaited draft Guidelines on the application of EC competition rules to the maritime transport services. The Guidelines apply to cooperation agreements in the maritime transport service sectors directly affected by the changes brought about by Regulation 1419/2006 applying to cabotage, liner and tramp shipping services. They are aimed at providing guidance to assist shipping companies in carrying out a self-assessment of cooperation agreements in which they are involved, i.e. they should enable the relevant companies to determine whether their cooperation agreements are compatible with Article 81 of the EC Treaty. The Guidelines will be valid for an initial period of five years.

2.2 The draft Guidelines aim in particular to shed light on the conditions under which liner operators may lawfully exchange freight information and under which tramp operators may enter into pooling arrangements. A complex set of parameters is set forth to that end. However, the real added value of the (draft) Guidelines in practice will have to be assessed in the future, e.g. will the (draft) Guidelines provide the required guidance for operators to determine the lawfulness of their intended conduct in the market?

3. General observations

Liner Shipping Services

3.1 The draft Guidelines dealing with liner shipping — apart from confirming what is already known i.e. that liner conferences on trades to or from the EU will be abolished as from 18 October 2008 — address permitted means of sharing market information between liner operators. Although certain details may need refinement, the Guidelines as drafted will probably just about provide the liner industry with the kind of information exchange it needs to function properly.

3.2 From 18 October 2008, liner carriers operating services to and/or from a port in the EU must cease all anti-competitive liner conference activities, regardless of whether such activities are permitted by other jurisdictions around the world. The EESC maintains that it will be difficult for globally-operating carriers to ensure that liner conference activities that are unlawful in the EU do not appreciably affect the EU market.

3.3 As far as liner shipping is concerned, the spotlight is on information exchange systems. Liner companies have been given some freedom to exchange information. Important elements include market structure, the type of information exchanged, how old it is and the frequency of the data exchange. The focus is rightly on the exchange of future data, notably capacity forecasts and price indices. It seems that capacity forecasts are prima facie always likely to be unlawful. The EESC acknowledges that the effects of information exchange must be considered on a case-by-case basis.

3.4 With regard to price indices, an aggregated price index is unlikely to infringe the law, unless the information can be disaggregated so as to allow undertakings directly or indirectly to identify the competitive strategies of their competitors. The level of aggregation, the ‘historic’ or ‘recent nature’ of the data and the frequency of publication should be assessed, but the draft Guidelines do not specifically state how much importance should be attached to these factors.

3.5 As far as liner services are concerned, the Guidelines do not contain any genuinely novel element, but seem to restate the general criteria previously developed by the European Commission and the European Courts.

3.6 The EESC reiterates its calls in related earlier opinions (1) for the EU to enter into meaningful consultations with other jurisdictions with a view to determining the compatibility between existing regimes governing liner trades worldwide. Furthermore, the EESC reiterates its recommendation in the same opinions that the European Commission should also take the human resources aspect (e.g. impact on employment for European seafarers) into consideration — in addition to purely competitive factors — when dealing with competition rules with regard to maritime transport.

Tramp Shipping Services

3.7 Tramp shipping services are global and highly competitive and they satisfy many of the characteristics of the perfect competition model. The commodity is homogeneous and entry costs are generally very low. Many companies compete for business, with substitution taking place between the different vessel sizes and vessel types depending on market circumstances. Information flows also make the market very transparent. Business is mainly carried out on the basis of voyage charters, consecutive voyage charters, contracts of affreightment or time charters. The freight rates achievable in these markets are highly volatile, depending on market circumstances. Finally, tramp shipping markets are able to respond rapidly to market developments and to shippers' needs (2).

3.8 Shipping pools operate in every sector of the tramp shipping business. A ‘pool’ is a collection of similar vessels, under different ownership, operating under a single administration. The pool manager manages the vessels as a single, cohesive fleet unit, collects their earnings and distributes them under a prearranged ‘weighting’ system, while the individual owner is left merely to conduct the nautical/technical operation of the ship. Pools are generally developed for two reasons. Firstly, they are set up to allow participants to provide the service levels that their major customers increasingly demand. Secondly, they aim to improve transport efficiency by special investment and increased ship utilisation. Pools operate in an environment of supply and demand where contracts are concluded on the basis of tenders, rates are driven to a large extent by a spot market, buyers are large and sophisticated and brokers offer an exceptional visibility of tonnage and conditions at any given time.

3.9 The EESC stresses that shipping pools do not constitute the majority of the tramp shipping markets. Indeed, the vast majority of tramp vessel services are operated by many small or medium-sized companies that compete with each other for cargo. For this reason, the EESC maintains that specific clarification in the Guidelines acknowledging this point is required.

3.10 The EESC notes that tramp vessel services as well as tramp shipping pools have always been subject to EC competition law, i.e. long before the adoption of Regulation 1419/2006 granting enforcement powers to the European Commission with regard to these services. However, during this period there have been no formal complaints from charterers with regard to this sector and there has been no case law. The EESC presumes that it is the lack of case law and thus experience of relevant (competition) authorities, including the European Commission, that explains why the sections of the draft Guidelines dealing with tramp shipping (pools) are less detailed than those on liner shipping. It is also noteworthy that the draft Guidelines do not define what they mean by ‘tramp shipping’ and it is therefore not clear whether they also apply to maritime passenger transport and/or to specialised shipping. It might be worth considering clarification of this point.

3.11 The draft Guidelines do not take sufficient account of the specifics of the tramp sector and appear to follow the non-sector specific Guidelines on Horizontal Cooperation. Shipping pools will have to conform to the same Guidelines applied to other industry sectors to ensure that they do not inhibit free competition or behave like a cartel.

3.12 The draft Guidelines are quite general and do not provide precise legal certainty. They do not explicitly state that shipping pools are incompatible with EU competition law but they do not provide the guidance as to when they are.

3.13 The most crucial section of the draft Guidelines is that dedicated to the assessment and classification of shipping pools. The starting point is the finding that pools generally involve joint marketing and varying degrees of joint production features.

3.14 With regard to the relevant market, the EESC maintains that the Guidelines should take into better account the fact that there is a substantial element of substitutability or interchangeability in tramp shipping on both the demand as well as the supply side, (e.g. with regard to vessel type, vessel size, types of transportation contracts and geographic market). Moreover, if a pool has to do a self-assessment, market shares cannot be defined for each and every contract but they have to be assessed over a given time period.

3.15 The EESC believes that improvements will be necessary with regard to the relevance and definitions of market share enjoyed by shipping pools and ‘substitution’ between trades and ship types. It acknowledges that no practical guidance is given regarding the definition of the relevant market. However, market shares could be quite different according to the methodology used.

3.16 In the assessment of tramp vessel pool agreements within the context of Article 81, it should be emphasised that the pool manager ‘manages’ the fleet put into the pool in both operational and commercial terms and hence offers a joint product through a single pool entity. The tendering of vessels in the market is de facto ancillary to the pool manager's task of managing the service being offered. Individual owners, for their part, retain responsibility for the pure nautical/technical operation of the vessels. Pools provide a jointly ‘produced’ service that is the result of a significant degree of integration of the parties' activities (3). Thus, pool agreements should be assessed on a par with other forms of joint production or specialisation agreements.

3.17 The EESC maintains 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 on the basis that the agreement of the price between the pool manager and the customer is an inherent part of the service being offered and it is the result of a price negotiation for use of a pool vessel in a bidding process.

3.18 The EESC believes that, given the purpose of pool agreements and their fundamental characteristics, the four conditions contained in article 81(3)EC are typically fulfilled to exempt pools. The fact that pools were established to respond to the needs and requirements of charterers and have for decades operated without complaint supports this view.

3.19 The EESC hopes that the European Commission will keep the Guidelines under constant review in the light of experience and, if necessary, bring out supplementary or clarification guidance as and when it is available without waiting for the five-year period to expire.

3.20 The Commission should at the earliest possible opportunity begin reviewing the scope of the liner consortia block exemption and on this occasion examine the need to cover also other relevant segments of the global shipping market, particularly those tramp trades that operate on a regular basis on regular routes, a feature of several specialised trades (e.g. conventional reefer vessels, timber trades and specialised car carriers and ro-ros).

Brussels, 12 March 2008. The President of the European Economic and Social Committee Dimitris DIMITRIADIS

(1) OJ C 256, 27.10.2007, p. 62–65; OJ C 309, 16.12.2006 p. 46-50; OJ C 157, 28.6.2005, p. 130–136.

(2) Fearnleys Report, ‘The Legal and Economic Analysis of Tramp Maritime Services’, February 2007, p. 14-31. http://ec.europa.eu/comm/competition/antitrust/legislation/maritime/tramp_report.pdf.

(3) Fearnley's Report (2007): the authors of this report have reached the same conclusion.