WRITTEN QUESTION E-3616/02

by Erik Meijer (GUE/NGL) to the Commission

(16 December 2002)

Subject: Regular and safe maritime shipping services on fixed routes jeopardised by ban on price agreements and authorisation to award secret discounts

1. Does the Commission intend to discontinue the liner conferences established towards the end of the 19th century that have ensured scheduled shipping services on fixed routes at fixed prices, and which as recently as 1986 were expressly exempted from the ban on price agreements within the European Union?

2. Will the Commission allow shipping undertakings the option of awarding discounts to regular customers without disclosing them to others?

3. What are the effects of lower prices on the availability of shipping services on routes and at times where the provision of cargo services in conditions of free competition would no longer cover costs? Does it expect that vessels so affected would continue to put to sea?

4. Does it expect lower prices to act as an impetus to putting to sea in aged and dilapidated vessels that pose serious risks to their crews, other shipping, the maritime environment and shorelines, since they are much more vulnerable to accidents?

5. Are the income reductions suffered by shipping companies being passed on to their staff? Are such measures an incentive to reduce seafarers' remuneration and working conditions by registering ships under flags of states that apply less stringent conditions than are the rule in EU Member States?

6. What impact will price reductions have in driving out existing labour and enabling an influx of the low-wage Chinese crews that are now being trained in large numbers, but probably to inadequate standards?

7. What action will the Commission take to continue to guarantee scheduled services with acceptable working conditions and adequate safety and environmental standards?

Answer given by Mr Monti on behalf of the Commission

(10 February 2003)

1. The Commission has not submitted any proposal to amend or repeal the Community block exemption for price-fixing by liner conferences. It is, however, undertaking a review of Council Regulation (EEC) No 4056/86 of 22 December 1986 laying down detailed rules for the application of Articles 85 and 86 of the Treaty to maritime transport(1), which contains the block exemption. This is entirely consistent with Commission practice with regard to other block exemptions (motor vehicles, insurance, etc.). It should be noted that most block exemption regulations provide for a review at regular intervals (usually five years) in order to verify that the conditions for granting the block exemption are still fulfilled. The Commission believes that this is a minimum requirement in order to comply both with the principle of sound administration and with the competition provisions of the EC Treaty. Indeed, the fact that no comprehensive review of the liner conference block exemption has been undertaken in the more than fifteen years since it entered into force, in circumstances where market conditions have changed considerably, could provide grounds for concern.

2. The Commission is not aware of any existing Community legislation that prohibits shipping operators from offering discounts to regular customers without disclosing them to others, and it has no plans to propose any such legislation.

3. Under conditions of free competition lower prices may cause inefficient operators with a high cost structure to exit the market. Prices would then normally rise to a level reflecting the new equilibrium between supply and demand. Services would be provided at this new equilibrium price level.

4. As long as there is demand for a high-quality service there will always be supply to meet that demand. Customers of containerised liner shipping services generally expect a high-quality service and would therefore be disinclined to ship their cargo on an aged and dilapidated vessel.

5. It should be recalled that the current, historically low, maritime freight rates are a consequence of supply exceeding demand. The only remedy for this situation is for supply to be reduced or for demand to increase. The former would occur naturally if inefficient operators were to exit the market. It should also be recalled that the current Community exemption for liner conference price-fixing benefits all members of conferences operating on liner shipping routes to and from the Community, regardless of their nationality. It is not a targeted measure to protect the Community liner shipping industry and its employees. As regards the specific problem of flagging out, several Member States have put in place tax regimes that act as an inducement for shipping operators to have their vessels registered in the Member State in question. The information available to the Commission suggests that these schemes have been quite successful.

6. The question implies that a ban on price-fixing by liner shipping operators would inevitably lead to a decline in the quality of service. As should be clear from the reply to question four, the Commission does not share that view.

7. The Commission is not aware of any imminent threat to scheduled services with acceptable working conditions and adequate safety and environmental standards. In this context, the Commission would draw the Honourable Member's attention to the existence of the Community block exemption for consortia (Commission Regulation (EC) No 823/2000 of 19 April 2000 on the application of Article 81(3) of the

Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia))(2), which allows liner shipping operators to share investment costs and engage in operational co-operation in order to provide a scheduled service. It does not allow the operators to fix prices.

(1) OJ L 378, 31.12.1986.

(2) OJ L 100, 20.4.2000.