2000/627/EC: Commission Decision of 16 May 2000 relating to a proceeding pursuant to Article 81 of the EC Treaty (IV/34.018 - Far East Trade Tariff Charges and Surcharges Agreement (FETTCSA)) (notified under document number C(2000) 1170) (Only the Danish, English, French and German texts are authentic)
Date: 2000-05-16
Institutions: European Commission
Subjects: charges for use of infrastructure, fine, infringement of EU law, inter-company agreement, maritime transport, reduced price

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 16 May 2000

relating to a proceeding pursuant to Article 81 of the EC Treaty

(IV/34.018 (cid:151) Far East Trade Tariff Charges and Surcharges Agreement (FETTCSA))

(notified under document number C(2000) 1170)

(Only the Danish, English, French and German texts are authentic)

(2000/627/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation No 17 of 6 February
1962, first Regulation implementing Articles 85 and 86 of the
Treaty (1),
(EC) No
1216/1999 (2), and in particular Article 3(1) and Article 15(2)
thereof,

by Regulation

amended

last

as

Having regard to Council Regulation (EEC) No 1017/68 of 19
July 1968 applying rules of competition to transport by rail,
road and inland waterway (3), as last amended by the Act of
Accession of Austria, Finland and Sweden, and in particular
Article 11(1) and Article 22(2) thereof,

Having regard to 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 (4),
as amended by the Act of Accession of Austria, Finland and
Sweden, and in particular Article 11(1) and Article 19(2)
thereof,

Having regard to the Commission’s decision of 19 April 1994
to initiate proceedings in this case,

(1) OJ 13, 21.2.1962, p. 204/62.
(2) OJ L 148, 15.6.1999, p. 5.
(3) OJ L 175, 23.7.1968, p. 1.
(4) OJ L 378, 31.12.1986, p. 4.

Having given the undertakings concerned the opportunity to
make known their views on the objections raised by the
Commission and to present any other comments in accordance
with Article 19 of Regulation No 17, Article 26 of Regulation
(EEC) No 1017/68, Article 23 of Regulation (EEC) No 4056/86
and Commission Regulation (EC) No 2842/98 of 22 December
1998 on the hearing of parties in certain proceedings under
Articles 85 and 86 of the EC Treaty (5),

and Monopolies,

Having consulted the Advisory Committee on Restrictive
Practices
the Advisory Committee on
Restrictive Practices and Monopolies in the Transport Industry
and the Advisory Committee on Agreements and Dominant
Positions in Maritime Transport,

Whereas:

SUMMARY

(1)

In this Decision, the Commission finds that the parties
to the Far East Trade Tariff Charges and Surcharges
Agreement (FETTCSA) infringed Article 81(1) of the EC
Treaty and Article 2 of Regulation (EEC) No 1017/68
by agreeing not to discount from published tariffs for

(5) OJ L 354, 30.12.1998, p. 18. Before the entry into force of
Regulation (EC) No 2842/98,
the Commission followed the
procedure provided for in Commission Regulations No 99/63/EEC,
(EEC) No 1630/69 and (EEC) No 4260/88.

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charges and surcharges. The agreement not to discount
is not capable of exemption under Article 81(3) and
Article 5 of Regulation (EEC) No 1017/68. The
Commission imposes fines for the infringement.

The minutes of the meetings quoted in recitals 40 to 54
show that the parties discussed possible ways of aligning
the practices of the members of the Far East Freight
Conference with those of their principal non-conference
competitors concerning charges and surcharges. Such
discussions within the framework of the FETTCSA went
beyond activities consistent with a (cid:145)technical agreement(cid:146)
within the meaning of Article 2(1) of Regulation (EEC)
No 4056/86 and Article 3(1) of Regulation (EEC) No
from such
1017/68. Any
discussions would constitute an infringement of Article
81 of the EC Treaty. The minutes do not show that a
specific
than the
agreement not to discount, and the present Decision
makes no finding of an infringement in relation to the
parties’ discussions about the tariff currency, and about
charges and surcharges.

agreement was

recorded other

agreement

resulting

10 May 1994. The Commission has been told that the
last meeting of the FETTCSA parties was held on 8
September 1992.

(9)

(10)

The FETTCSA has not been notified to the Commission
for an individual exemption, the parties considering that
it is a technical agreement falling within Article 2 of
Regulation (EEC) No 4056/86.

The Commission considers
the FETTCSA falls
within the scope of application of Regulation No 17
and Regulation (EEC) No 1017/68 as well as Regulation
(EEC) No 4056/86.

that

2. THE PARTIES

2.1. Parties to the FETTSCA

(11)

The parties to the FETTCSA were all shipping lines.
There were initially 20 members: 14 were members of
the Far Eastern Freight Conference (FEFC) whilst six
were independent shipping lines operating in the same
trades (see below).

THE FACTS

FEFC members:

1. INTRODUCTION

The Far East Trade Tariff Charges and Surcharges
Agreement (FETTCSA) was an agreement dated 5 March
1991 between shipping lines operating on the north
Europe/Far East trade. The FETTCSA came into force on
4 June 1991.

The FETTCSA parties claimed that the (cid:145)object of the
Agreement is to improve the operational functioning of
the maritime transport industry by introducing greater
transparency and functional clarity in charges and
surcharges and by achieving the standardisation of
methodology and in their calculation(cid:146).

On 15 July 1991 the European Shippers’ Councils
lodged a formal complaint with the Commission against
the FETTCSA.

Independent
lines:

28

the

1992

September

Commission’s
On
the
for Competition informed
Directorate-General
FETTCSA parties of
the FETTCSA fell
its view that
within Article 85(1) (now Article 81(1)), that it was not
a (cid:145)technical agreement(cid:146) within the meaning of Article
2(1) of Regulation (EEC) No 4056/86 and that it should
be notified in order to allow the Commission to decide
whether an individual exemption might be granted.

Ben Line Container Holdings Ltd
(Ben Line)
Compagnie GØnØrale Maritime
(CGM)
East Asiatic Company (EAC)
Hapag-Lloyd AG (Hapag-Lloyd)
Kawasaki Kisen Kaisha Ltd (K Line)
A.P. Młller (cid:151) Maersk Line (Maersk)
Malaysia International Shipping
Corporation Bhd (MISC)
Mitsui OSK Lines Ltd (MOL)
Nedlloyd Lijnen BV (Nedlloyd)
Neptune Orient Lines Ltd (NOL)
Nippon Yusen Kaisha (NYK)
Orient Overseas Container Line
(OOCL)
P & O Containers Ltd (P & O)
Polish Ocean Line (POL)
Cho Yang Shipping Co. Ltd (Cho
Yang)
Deutsche Seereederei Rostock GmbH
(DSR)
Evergreen Marine Corp. (Taiwan) Ltd
(Evergreen)
Hanjin Shipping Co. Ltd (Hanjin)
Senator Linie GmbH & Co. KG
(Senator)
Yangming Marine Transport Corp.
(Yangming)

On 19 April 1994 the Commission adopted a Statement
of Objections.

On 26 May 1994 the Commission was informed that
the FETTCSA parties had terminated the agreement on

(12)

The Statement of Objections was addressed to 18
members of the FETTCSA: those listed above except Ben
Line and EAC. The Commission was informed on 14

(2)

(3)

(4)

(5)

(6)

(7)

(8)

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July 1992 that Ben Line ceased shipping activities on 2
July 1992. The Commission was (in the East Asia
Trades Agreement proceedings, see recitals 19, 20 and
21)
informed on 23 July 1993 that the East Asiatic
Company and EACBen Container Line Ltd no longer
operate vessels on the trades in question, although for a
while the vessels they had operated were maintained in
use on the same trades by Maersk.

(13)

trades and,

they merged.

In 1994, CGM left

Since January 1991, DSR and Senator operated a joint
in
service in the north Europe/Far East
1994,
the north
Europe/Far East trade and, in 1996, it was purchased by
Compagnie Maritime d’AffrŁtement. In 1997, Nedlloyd
Lijnen BV and P & O Containers Limited merged to
form P & O Nedlloyd Container Line Ltd, Hapag-Lloyd
AG transferred its containerised liner shipping activities
to Hapag Lloyd Container Linie GmbH, and Hanjin
acquired control of DSR Senator Lines GmbH.

(14)

In considering the FETTCSA, it is relevant to consider
not only the parties to the agreement at the relevant
time but also the structure of the market. In particular it
is significant that many of the FETTCSA parties were
members of the FEFC and that all the parties to the
FETTCSA were parties to the EATA. Membership of the
FETTCSA parties to these other agreements is set out in
Table 1 below.

Table 1: Market structure in 1993

EATA

FETTCSA

CGM

Cho Yang

DSR/Senator

Evergreen

Hanjin

Hapag-Lloyd

Hyundai

K Line

Maersk

MISC

MOL

Nedlloyd

NOL

NYK

OOCL

P & OCL

Yangming

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

no

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

FEFC

yes

no

no

no

no

yes

no

yes

yes

yes

yes

yes

yes

yes

yes

yes

no

2.2. The Far Eastern Freight Conference (6)

(15)

The FEFC is an association of shipping lines which
operate liner
shipping services on routes between
Europe and the Far East. The FEFC does not itself offer
any shipping service or enter
into contracts with
shippers or other customers. It regulates a number of
conditions,
including tariffs, on the basis of which its
member lines offer their services. The FEFC is used by
its member lines as a central body for publishing their
decisions
relevant
and communicating with other
organisations, including shippers’ councils.

(16) Under Article 3 of Regulation (EEC) No 4056/86 (the
block exemption for liner conferences), the members of
the FEFC are permitted to operate under uniform or
liner maritime
common rates
transport services.

the provision of

for

(17)

The members of the FEFC also agree on the levels of
charges and surcharges that were the subject of
the
FETTCSA. This Decision deals only with the extension
to the independent lines of the FEFC lines’ decision, in
to grant
relation to charges and surcharges, not
discounts. To the extent that the FEFC’s charges and
surcharges relate to maritime transport services, they fall
within the block exemption for liner conferences. This
Decision does not
the question whether
agreements fixing the amount of charges and surcharges
relating to port handling services fall within the scope
of the block exemption. As regards inlands transport
services, the Commission has previously decided that
price-fixing agreements relating to such services fall
outside the scope of the block exemption (7).

address

(18)

In 1991 the members of the FEFC had a 58 % market
share for traffic between northern Europe and the Far
East.

2.3. East Asia Trades Agreement (8)

(19)

The EATA was an agreement dated 27 August 1992
between all the major shipping lines on the Europe/Far

(6) The Far Eastern Freight Conference includes the Europe/Japan and
Japan/Europe Freight Conferences, Hong Kong/Europe Freight
Conference, Philippines/Europe Conference and Sabah, Brunei and
Sarawak Freight Conference. Its activities are further described in
Commission Decision 94/985/EC (Far Eastern Freight Conference),
(OJ L 378, 31.12.1994, p. 17).

(7) Decision 94/985/EC (Far Eastern Freight Conference); Commission
(OJ
L 376,
1999/243/EC

Decision 94/980/EC (Transatlantic Agreement)
31.12.1994,
Commission Decision
(Transatlantic Conference Agreement) (OJ L 95, 9.4.1999, p. 1).

1);

p.

(8) Commission Decision

1999/485/EC

(Europe Asia

Trades

Agreement) (OJ L 193, 26.7.1999, p. 23).

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East trade, including 12 members of the FEFC and seven
trades (9).
the
lines
non-conference
According to the EATA Secretary (10),
the FETTCSA
emerged in March 1991 as a result of discussions by
various shipping lines concerning the forerunner to the
EATA, the European Stabilisation Agreement (ESA).

operating

in

(20)

The EATA provided for the exchange of information
relating to capacity and the setting-up of a capacity
management programme under which the parties
agreed not to use part of their capacity. The express
purpose of the EATA was to reduce price competition
between the parties to the EATA by artificially limiting
the liner shipping capacity made available to shippers
wishing to have goods transported from north Europe
to the Far East.

(21)

The parties to the EATA terminated their agreement
with effect from 16 September 1997.

3. THE FETTCSA

3.1. The terms of the FETTCSA

(22) According to section 2 of the Agreement, the FETTCSA

aimed:

(i)

to create industrial standards for the calculation and
setting of charges and surcharges by means of
common procedural mechanisms; and

(ii) to use a common mechanism for the calculation
and setting of charges and surcharges other than sea
freight and inland haulage.

(23)

Specifically section 5 of the Agreement provided:

(cid:145)For the purposes of the calculating and the setting of
charges and surcharges other than sea freight and inland
freight,
the Parties may consult each other for the
following purposes:

(a) The establishment or application of uniform rules
concerning
conditions
structure
governing the application of transport tariffs.

and

the

the

(24)

The wording of the objectives set out in section 5(a) and
(b) of the Agreement reflect respectively the language
used in Article 2(1)(f) and (c) of the Regulation (EEC) No
4056/86.

(25)

Section 6 of the Agreement provided:

shall apply the same methodology for
(cid:145)The Parties
[(cid:133)]
calculating and setting charges and surcharges
according to the common mechanisms and procedures
envisaged by section 2 and created by section 5 of this
Agreement.(cid:146)

(26)

Sections 7 and 11 of the Agreement provided for the
parties to exchange views and information regarding
any matter within the scope of the Agreement as well as
for the administration of the Agreement. Section 3 of
the Agreement provided that
the parties are not
required to agree upon or to adhere to any common
course of action (except to the extent that the parties
may agree to incur a common expense or contractual
obligation to third parties) and that adherence to the
Agreement by the parties is voluntary.

(27)

the Agreement provided that

the
Section 11 of
Director-General and staff of the FEFC were to serve as
a secretariat of the FETTCSA for the duration of the
Agreement.

3.2. The scope of the FETTCSA

(28)

The principal charges and surcharges applied in the
Europe/Far East trades are the following:

1. Bunker adjustment factor (BAF);

2. Currency adjustment factor (CAF);

3. Terminal handling charges (THC);

4. Less-than-container-load service charges (LCLSC);

(b) The establishment or application of inclusive rates
and conditions for the organisation and execution of
successive or
transport
operations.(cid:146)

supplementary maritime

5. Detention charges;

6. Demurrage charges;

(9) Hyundai Merchant Marine Co. Ltd was a party to the EATA but

not to the FETTCSA.

(10) Letter from the EATA Secretary to the Commission dated 19

October 1993.

7. Special equipment premium;

8. War surcharges.

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(29) A brief description of each of

these charges and
surcharges is contained in Annex II. Other charges and
surcharges include transport additionals, non-standard
lift charges, hazardous cargo surcharges and congestion
surcharges.

(34)

(30) A schedule showing how these charges and surcharges
are incorporated into the price paid by the shipper is
attached as Annex III. this schedule is taken from NT90,
the tariff schedule published by the FEFC (11).

of

those meetings

The minutes
show that
representatives of all the lines (with the exceptions of
Ben Line and POL and, at
the first meeting, MISC)
attended those meetings along with a number of
representatives of
the
Commission relies on those minutes together with the
FETTCSA Agreement itself as supplemented by various
explanations
FETTCSA
the
secretariats in correspondence with the Commission,
and the parties’ reply to the Commission’s Statement of
Objections.

In this Decision,

FEFC and

the FEFC.

given

by

3.3. The geographical scope of the FETTCSA

4.1. Agreement not to discount

(31) According

to

the

Germany,

FETTCSA,

section 4 of

the
geographical scope of the Agreement is transport from
ports and points in the Far East to ports and points in
north Europe and vice versa. North Europe is defined as
Austria, Belgium, Czechoslovakia, Denmark, Finland,
France,
Ireland,
Hungary,
Luxembourg, the Netherlands, Norway, Poland, Sweden,
Switzerland and the United Kingdom. The Far East is
defined as
the Republic of Korea, People’s
Republic of China, Republic of China/Taiwan, Hong
Kong, Macao, Thailand, Cambodia, Vietnam, Singapore,
the Philippines and
Malaysia, Laos, Burma, Brunei,
Indonesia.

Iceland,

Japan,

3.4. Significance of charges and surcharges

(32) According to the European Shippers’ Councils and the
Conseil national des usagers des transports (CNUT) (12)
charges additional to ocean freight such as surcharges
could amount to some 35 % of the total transport cost
to shippers or as much as 60 % of the actual freight
rate. The FETTCSA secretariat has accepted that charges
and surcharges could amount (in the eastbound trade)
to up to 60 % of the total tariff (13).

(36)

4. ACTIVITIES OF THE PARTIES PURSUANT TO THE

FETTCSA

(33)

The parties held the following meetings within the
framework of the FETTCSA:

1. 30 September 1991 (cid:151) Technical Committee;

2. 9 June 1992 (cid:151) Principals;

3. 8 September 1992 (cid:151) Principals.

(35)

The following agreement is recorded in the notes of the
meeting held on 9 June 1992:

(cid:145)Under the provisions of the FETTCSA the timing of the
imposition of charges and surcharges should be agreed.
The Chairman stated that he had to report under the
terms of the FETTCSA that the prinicipals of FEFC lines
had decided that all additionals including CAF/BAF, etc.,
would be charged in full as per the FEFC tariff with effect
from 1 July 1992. It was appreciated that some deals
all-in basis which
had been arranged on a net
unfortunately took time to change but any new deals
would include all additionals.
It was proposed that all
Parties to the FETTCSA charged additionals in full as per
their own individual tariffs for the eastbound and westbound
trades.

This was agreed by the FETTCSA lines present without
dissent.(cid:146) (emphasis added).

tariffs.

In their

The Commission concludes that those FETTCSA lines
present at the meeting (i.e. all those who were party to
the FETTCSA other than Ben Line and POL) agreed that
with effect from 1 July 1992 they would no longer
grant discounts off the rates for (cid:145)additionals(cid:146) as quoted
reply to the Statement of
in their
Objections the FETTCSA parties admit that (cid:145)the wording
of the note of the meeting of the FETTCSA principals of
9 June 1992 is unfortunately open to such an
interpretation(cid:146). The parties claim that their Agreement
an
was not
agreement
i.e. an
agreement to quote and invoice rates broken down into
their different elements (cid:145)by referring to all additionals
appearing in an individual line’s tariff for the purpose of
providing clarity to shippers(cid:146) (14). In view of the wording
of the minutes, the Commission ins unconvinced by the
parties’ interpretation of the Agreement.

an agreement not
to stop charging (cid:145)net all-in(cid:146) rates,

to discount, but

(11) NT90 was the tariff schedule introduced with effect

from 1

January 1990.

(12) Letter from CNUT to the Commission dated 27 September 1991.
(13) Letter from FETTCSA to the Commission dated 19 October 1992.

(37)

The Commission further concludes
(cid:145)additionals(cid:146)
refers to the charges and surcharges listed at recitals 28,

that

(14) Reply to Statement of Objections point 2.11.

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29 and 30, as well as to the following charges:

(41)

1. Non-standard lift charges (NSLs);

2. Optional destinations;

3. Change of destination (COD);

4. Change of delivery status;

The Commission has been told that no date was fixed
for such a meeting (indeed, the meeting of 8 September
1992 was the last meeting held under the FETTCSA)
and the question of a change in the tariff currency was
not developed further. Nevertheless
these minutes
demonstrate that the parties to the FETTCSA discussed
acting in concert in relation to a measure which, in the
words of
FETTCSA’s own document, would
fundamentally affect the basis of calculations for CAF
surcharges imposed by the parties to the FETTCSA. The
purpose of such concerted action would have been to
reduce the parties’ (cid:145)considerable exchange losses(cid:146).

the

5. Packages of value exceeding the carrier’s normal bill

of lading liability.

4.3. Discussions on charges and surcharges

(38) Descriptions of these charges are given in Annex II. In
the FEFC’s tariff schedule, NT90, these additionals are
given as flat rates in US dollars based on weight or
numbers of optional destinations or per TEU (20 foot
equivalent unit), as a percentage of ad valorem value, or
by reference
tariff
schedule (15).

rates quoted in the

to other

(39)

It is clear from the minutes of the meeting of 9 June
1992 quoted in recital 35 that lines could and did offer
(cid:145)net all-in(cid:146) rates which did not identify the parts of the
rate which represented the price for haulage or ocean
and
those which represent
freight
surcharges.

charges

and

4.2. Discussion about tariff currency

BAF and CAF

(42)

The notes of
contain the following extract concerning the BAF:

the meeting of 30 September 1991

(cid:145)(cid:133) it should be pointed out that the north Atlantic is a
much simpler
trade to monitor having shorter sea
distances compared to the Far East trade so that it can
presumably be assumed that bunkers are only stemmed
on New York and Rotterdam prices. On the other hand
on the Far East trade, bunkers can be stemmed at many
interim ports between Europe and Japan with a
resulting wider variation in prices as up to 20 ports are
covered(cid:146).

(40)

The notes of the meeting held on 8 September 1992
read as follows:

(43)

The notes contain the following extract concerning the
CAF:

(cid:145)The Chairman reported that he had to advise under the
terms of the FETTCSA that the principals of FEFC lines
were considering a change in the tariff currency and if this
were to happen then it would fundamentally affect the
basis of FAC calculations. The present currency, US
dollars was subject to considerable fluctuation and was
suffered
presently very weak which meant
considerable
losses. A switch to the ecu or
possibly the German mark or yen was being considered
by FEFC lines and it might therefore be appropriate for
FETTCSA lines to meet in due course to consider the
issues involved.

exchange

lines

that

(cid:145)Conference lines’ input on their pattern of costs and the
Conference cargo flows are given to an independent
firm of accountants who then regularly recalculate Line
1 of the CAF. Line 1 is used to weight the currencies in
the Conference (cid:147)basket(cid:148) and their re/devaluation against
the base rates of exchange, currently October 1989,
(Line 2)
the
underlying CAF. This is compared against the operative
CAF and if the difference passes one of the (cid:147)triggers(cid:148) a
CAF change occurs(cid:146).

is then calculated to result

in Line 3,

All FETTCSA lines present expressed an interest
in
participating in such a meeting and it was left that this
issue would be developed in due course.(cid:146)
(empahsis
added).

(15) See NT90, section 3.6.

(44)

The notes also contain the following extract concerning
both the BAF and the CAF:

(cid:145)In considering BAF and CAF from a FETTCSA point of
suggested that broadly speaking, and
view,
it was
the number of CAF’s had been
especially now that

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reduced from 10 to three,
the independents and
Conference lines would have fairly similar bunker
offtake and cost/currency structures since they traded
the same routes. However lines’ domestic cost structures
which could affect base data used, for example in the
different
bunker weighting, may
depending on where the line is based. This may
therefore indicate the necessity to use more publicly
available indices.

be marginally

FEFC earn their revenues and where they incur their
expenses (see Annex II).

(48)

from the notes of

the meeting of 30
The extract
September 1991 quoted in recitals 42, 43 and 44 show
that the FETTCSA parties discussed calculating a single
level of BAF and CAF to be applied both by the
Conference members and by the independents who
were members of the FETTCSA.

Although it was fully appreciated that at this early stage
of FETTCSA, the Committee’s function is to study and
search for a common methodology for calculating
accessorial charges,
there is the chance that simply
adopting a similar methodology to the FEFC could lead
to each independent calculating its own quite separate
levels of BAF and CAF. At a time when shipper bodies
constantly criticise differences in charges as between
Conferences
the
separate
application of a whole range of e.g. CAF and BAF levels
in the same trade would be in shippers’ interests, could
be questioned. In this respect and as even the secretariat
do not see the detailed input from the lines, only the
averaged results,
the
independents might eventually consider putting in their
own figures to the independent accountants at least in
an exploratory way in order to arrive at overall Far
Eastern bunker offtakes and CAF Line 1.(cid:146)

the thought was expressed that

trades, whether

in quite

THC

(49)

The notes of
contain the following extract concerning THCs:

the meeting of 30 September 1991

(cid:145)It was stressed that there is no profit element in the
Conference THC and the effect of the 80/20 cost split in
further reducing the THC levels was explained. On the
basis of
this information, some independents advised
they now realised why the FEFC THC levels had often
seemed too low.(cid:146)

(50)

(45)

From these extracts and from the descriptions of BAF
and CAF given in Annex II, it can be seen that there are
a number of cost elements
in
calculating BAF and CAF which are not uniform
between the lines but which vary depending on the
ability of each line to maximise their revenues and to
keep their costs to a minimum.

taken into account

In order to arrive at the FEFC THC for each port within
the FEFC range, the FEFC Secretariat consolidates and
averages out
incurred by its members.
According to the FEFC (cid:145)(t)hese costs can vary according
to the individual line/consortium’s throughput at a port
and their agreeement with a terminal operator(cid:146) (16).

costs

the

(46)

So far as BAF is concerned, the following three factors
would appear to have a bearing on the level at which
the BAF for any particular line is set:

LCL service charges

1. where it lifts its bunkers;

2.

its proportion of bunker costs to net sea freight
revenue;

(51)

the meeting of 30 September 1991
The notes of
contain the following extract concerning LCL service
charges:

in obtaining the (cid:147)THC
(cid:145)Members were advised that
element(cid:148)(suitably weighted according to the 80/20 split)
for calculating LCL SC,
the Conference has to use
(cid:147)arbitrary(cid:148) factors, currently 9TW in Europe for both
eastbound and westbound cargo and 21,5 M/25M for
eastbound and westbound cargo in the Far East.(cid:146)

3.

the base level for bunker costs incorporated in its
freight rates.

(52)

(cid:145)arbitrary factors(cid:146)

The use of
element of LCL service charges
element is not based on individual lines’ actual costs.

to calculate the THC
this

suggests

that

(47)

the
So far as CAF is concerned, FEFC practice at
material
time was to base the CAF on a basket of
currencies weighted to reflect where the members of the

(16) FETTCSA circular to members, FT/3, supplied to the Commission

pursuant to a request for information dated October 1993.

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Dentention and demurrage charges

(53)

The notes of
the meeting of 30 September 1991
contain the following extract concerning detention
charges and demurrage charges:

(cid:145)Before concluding the discussion on the detention and
demurrage charges mention was made of the current
lines are experiencing
situation in Korea where all
severe delay in the movement of their equipment due to
internal congestion in Korea.
taking
some action to remedy the situation, moves are under
way through the KSAA to ensure
that whatever
detention and demurrage charges the various carriers
show in their tariffs are actually implemented. One of
the independents advised that
they are not releasing
cargo until all such costs/charges have been paid.(cid:146)

In the hope of

terms

This extract shows the importance of terms of payment
regulating how and within what period
(i.e.
payment is to be made)
in relation to detention and
demurrage charges. These charges are calculated on the
basis of (cid:145)an estimate of the long-term leasing costs of
equipment which lines would have to hire to cover that
detained by the client(cid:146) (17). As with terminal costs,
leasing costs vary depending on the negotiating power
of any particular line.

5. THE RELEVANT PRODUCT MARKET

for

relevant product market

the purpose of
The
considering the agreement not to discount entered into
by the FETTCSA parties is that of scheduled maritime
transport services for the transport of containerised
cargo between northern Europe and the Far East. This
includes on the one hand ports in the United Kingdom,
Ireland, Belgium, the Netherlands, Germany, northern
France, Norway, Finland, Denmark, Sweden and Iceland
and on the other hand ports in Japan, North and South
Korea, Taiwan, Hong Kong, Singapore, Malaysia and the
Philippines.

(54)

(55)

(56)

In these proceedings the parties have adopted the same
arguments as to market definition as they put forward
in the EATA proceedings (18). The parties consider that
there are a number of substitutable ways of transporting
goods from northern Europe to the Far East.

(i) The first

is that provided by specialised vessels
which can carry
volume
some of
homogenous products moving within the general
cargo sector;

large

the

(17) See footnote 16.
(18) Reply to the Statement of Objections, paragraph 2.41. The EATA
only directly covered the eastbound trade whilst the FETTCSA
covered both eastbound and westbound trade.

(ii) The second is provided by ships in the bulk or
specialised sectors which can also carry a number of
containers;

(iii) The third is said to be air and air-sea combinations

for goods requiring faster shipment;

(iv) The

fourth

substitute

is

the

possibility

of

transporting goods by the Trans-Siberian Railway;

(v) The fifth possibility is offered by carriers operating
westbound out of north Europe which can also
serve the Far East either by using rail land bridges
across
the United States of America, or by
trans-shipping at US west coast ports onto Pacific
services (i.e. Europe/US east coast/US west coast/Far
East);

(vi) Finally, the parties consider that services from the
Mediterranean and Black Sea represent a significant
source of competition to the operators on the north
Europe to Far East trades.

The Commission’s
substitution coming from any of
explained below.

findings

in respect of possible
those ways are

5.1. Maritime services

the following reasons, none of

For
the alternative
maritime services mentioned by the parties (except for
services via the Pacific, which are separately considered
in recitals 85 to 88) is considered to form part of the
same market as the market
for scheduled maritime
transport services for the transport of containerised
cargo between north Europe and the Far East.

stated that

In the Tetra Pak case (19), the Court of Justice of the
European Communities
the stability of
demand for a certain product is the appropriate basis
for defining a relevant market and that the fact that
different
extent,
interchangeable does not preclude the conclusion that
these products belong to separate product markets.

a marginal

products

are,

to

of

The Commission takes the view that,
the vast
majority
categories
users
of
containerised liner
forms of
(break-bulk
maritime transport,
liner transport, do not offer a reasonable alternative to

goods
and
shipping,
the other
including conventional

for

of

(57)

(58)

(59)

(60)

(19) Case C-333/94 P Tetra Pak International SA v Commission [1996]

ECR I-5951, points 13,14 and 15.

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containerised transport services on the routes falling
within the relevant geographic market in this case and
that these services constitute one or more markets in
their own right.

it

relevant market,
is only necessary to consider the
effect of substitutability from carriage in container to
carriage in bulk: there is no lasting substitution from
container to bulk in the vast majority of cases.

(61)

The effect of marginal competition from other means of
transport for certain categories of goods can be limited.
This situation arises because liner shipping companies
are able to identify shippers of such goods and, because
of the differentiated price structure in liner shipping,
offer lower prices to such shippers without necessarily
affecting prices generally.

5.1.1. Non-scheduled services

(62)

(63)

(64)

from that of

Firstly, scheduled maritime transport, or liner services
constitute a separate market
tramp
services (20). On the whole the nature of the relationship
between shippers on the one hand and shipping lines is
quite different depending on whether
is
providing liner services or tramp services. Liner services
the operator being a
are provided on the basis of
(cid:145)common carrier(cid:146): that is to say, the transport service
provider offers to carry all the goods brought to it for
carriage. On the other hand tramp services are usually
supplied on the basis of ad hoc individually negotiated
contracts.

the latter

Charters are only viable for containerisable goods (21)
provided the shipper has a sufficiently large cargo, or is
able to combine with other shippers for each trip.
Furthermore, chartering and bulk or specialised services
will not as a rule give the frequency, regularity or
dependability of service required by many shippers, nor
service often
can they provide
required.

the door-to-door

5.1.2. Bulk services

is

and

that many bulk commodities

can be
It
clear
containerised
of
containerisation (in the late 1950s) all goods travelled
bulk of some description or another. In the present case,
in order to determine the competitive conditions in the

advent

before

that

the

In mature markets,

(65) Almost all cargo can be containerised and, over time, it
is likely that
the degree of containerisation in most
maritime markets involving Member States will be very
the northern
high.
such as
Europe/United States of America or
the northern
Europe/Far East markets, the process of change towards
if
containerisation is more or less complete, and few,
any, non-containerised cargoes are
left which are
capable of being containerised.

(66)

Furthermore, once a type of cargo regularly becomes
containerised it is unlikely ever to be transported again
as non-containerised cargo. The reasons for this are that
shippers become accustomed to shipping in smaller but
more frequent quantities and become accustomed to the
fact that once cargo has been loaded into a container, it
is easier to ship onwards from the port of delivery to
the ultimate consignee using multimodal transport.

(67)

as

containerisation increases,
the degree of
Thus,
shippers of non-containerised cargoes
turn towards
containerised services but once those shippers have
become accustomed to shipping in containers they do
not revert to non-containerised shipping. Such examples
of one-way substitutability are not uncommon (22).

(68) Drewry (23) makes

a

that

estimate

cautious

to 35,1 % in 1990,

this percentage will

the
containerised share of world general cargo trade has
risen from 20,7 % in 1980,
to
41,6 % in 1994. Drewry forecasts that by the year
2000,
to 53,8 %. The
transformation from bulk shipping to containerisation
reflects not only a change in the nature of the goods
to
from raw materials
being shipped (essentially
inherent
also the
manufactured commodities), but
characteristics of containerised liner shipping.

rise

(69)

These characteristics
include the following. Smaller
more frequent shipments, as is typically the case with

(20) See the definition of (cid:145)tramp vessel services(cid:146) in Article 1(3)(a) of
the freely

Regulation (EEC) No 4056/86, which emphasises
negotiated nature of tramp service freight rates.

(21) It should be noted that containers generally measure 20 feet or 40
feet by eight feet on the outside and that vessel slots are sized to
match. Accordingly cargoes which are larger in width or length
than these dimensions use up slots in an inefficient manner.

(22) Such one-way substitutability is not restricted to shipping:

for
example, although soft drinks are not a substitute for bottled
waters, it is not necessarily the case that bottled waters are not a
substitute for soft drinks. See Commission Decision 92/553/EEC
(NestlØ/Perrier) (OJ L 356, 5.12.1991, p.1).

(23) Drewry, Global Container Markets, pages 38 to 48.

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likely to suffer

container shipping,
lead to reduced inventory costs.
from
Containerised goods are less
damage and pilferage. Containerised goods are easier to
ship multimodally. For these reasons, once a commodity
has made the transformation from bulk to container,
possibly on a route-by-route basis, the differences in the
nature of the service being provided mean that once
that transformation period is over, a shipper is highly
unlikely to revert to bulk shipping.

it

that

is not

context,

question

important

travel by both means:
determining
for

certain
In this
the
commodities may still
demand
essential
substitutability is whether the choice of mode is made
on the basis of the characteristics of the mode. Thus,
the fact that some steel products may travel by bulk and
others by container does not show that the two modes
are substitutable since it does not take into account the
diverse nature (and value) of steel products nor the
delivery requirements of customers. The same is true for
the other products
claim
substitutability between bulk and containers.

for which the parties

that

Even to the extent
reefer containers may be
substitutable for bulk reefer services (24), for the reasons
given above this does not mean that bulk reefer services
are substitutable for reefer container services. Apart
from the advantages offered by liner container services,
such as smaller volumes and speed of transfer to other
modes of transport, a wider variety of products can
travel in reefer containers than can travel as bulk reefer
cargoes. Such products
and leathers,
pharmaceuticals, electronic goods and, because of the
steady temperatures and the ability to control ripening,
soft fruits.

include

furs

(70)

(71)

(72) On this basis, while it is possible that in exceptional
circumstances some substitution may occur between
break-bulk and container transport,
it has not been
demonstrated that there is any lasting substitution from
container towards bulk for the vast majority of cases.

(73) On the supply side, the parties have argued that break
and neo-break carriers could readily convert their vessels
so as to enter into the relevant market and for this
reason should be regarded as potential competitors.

(74)

In principle, any vessel can carry containers. The effect
of potential competition from operators of non-fully
containerised vessels could only be material if both of
it
the following two conditions were fulfilled. First,
would have to be shown that suppliers of such services
could economically compete with the parties on even
terms and second that customers regarded carriage on a
non-fully containerised vessel as being functionally
interchangeable with carriage on a fully containerised
vessel.

(75)

In considering whether the first of these cumulative tests
is fulfilled, it is essential to note that the characteristics
and performance of non-fully containerised vessels are
significantly different
fully containerised
vessels:

to those of

is

clear,

crystal

implicit

and almost

(cid:145)It
in the
terminology, that cellular containership capacity is more
efficient and more productive than non-cellular space
when it comes to carrying unitised (i.e. containerised)
cargo, and hence of greater significance as far as the
supply/demand balance is concerned. Each slot on a
cellular vessel will provide more container carrying
capacity in any given year than a slot on a non-cellular
vessel, since the cellular ship:

(cid:151) spends less time in port,

(cid:151) usually possesses a much higher sea-speed,

(cid:151) operates on regular liner schedules (25).

While ro-ros may achieve 80 % or more of
the
productivity of a cellular vessel, a semi-containership or
a con-bulker will be considerably less efficient on the
grounds of both speed and cargo-handling time in port.
An overall estimate of the relative productivity ratios for
cellular and non-cellular capacity might reasonably be
2:1(cid:146) (26).

(76) Apart

characteristics which
from the performance
militate against supply side conversion,
there are a
number of technical characteristics. The first of these is
the additional expenditure required to carry containers

(24) According to Mats

Jansson, President of Unicool and Cool
Carriers, (cid:145)The reefer container capacity deployed is still limited and
the negative impact so far on the demand for specialised reefers is
small.(cid:146) (Fairplay, 3 July 1997).

(25) Drewry, Global Container Markets, page 69.
(26) Drewry, Global Container Markets, page 71.

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on vessels which were not specifically built as container
vessels. Such costs are both one-off in the sense that
chains and fittings have to be purchased (according to
Dynamar at a cost of some ECU 150 per slot) and
variable in the sense that the cost of labour is higher for
stowing containers on non-container vessels than on
container vessels. Account needs also to be taken of the
additional port costs involved in carrying containers on
such vessels
and
to slower
consequentially longer periods spent in port.

stowing

times

due

The second reason for which the potential capacity of
non-fully containerised vessels is less than the parties
assert is the fact that the operators of such vessels do
not possess the same fleets of containers as do operators
the
of
fully containerised vessels. Typically each of
parties has three containers for every vessel slot
it
operates. Many operators of break-bulk services will
own no containers at all. The significance of this is
especially important given that (cid:145)the global box inventory
has seldom, and certainly not for the last 10 years or
the nominal
more been sufficient
to be
containership capacity of the non-cellular fleet
used(cid:146) (27). This situation is compounded by the fact that
the operators of non-fully containerised vessels do not
generally possess the same land-side facilities as do
operators of fully-containerised vessels.

to permit

all

substitutable
vessel. Differences

So far as the customers are concerned, the Commission
does not accept that the vast majority of customers of
the parties would regard carriage on a bulk or neo-bulk
carriage on a
vessel
as being
fully-containerised
as
customers are concerned are the absence of scheduled
weekly sailings and the fact that in many cases non-fully
containerised vessels use different port
terminals or
berths to the ones used by fully containerised vessels
with
for multimodal
consequential
transport operations.

inefficiencies

for

far

so

Thus, the Commission does not agree that break and
neo-break carriers should be considered a source of
either actual or potential competition to containerised
liner services. Operators of non-containerised vessels
in
would have

investments

significant

to make

(77)

(78)

(79)

(27) Drewry, Global Container Markets, page 70.

containers, stowing equipment and land-side facilities, as
in order to
well as incurring higher operating costs,
offer services that would be less attractive to customers.

5.1.3. Mediterranean/Black Sea services

(80)

The parties have also argued that services from the
Mediterranean and Black Sea represent a significant
source of competition to the operators on the north
Europe to Far East trades. The parties have failed to give
a single example of cargo actually switching from one
to the other in the Reply to the Statement of Objections
Furthermore, Drewry
the
in
considers that:

EATA proceedings.

least

(cid:145)By turning in the Mediterranean, Europe-Far East ships
could save at
two weeks on their average
nine-week round voyage time (a 22 % increase in vessel
productivity), but this seems unlikely in anything like
the
infrastructural
limitations of the southern ports and the European rail
system(cid:146) (28).

foreseeable

future,

given

the

(81)

(82)

In 1991, port productivity in the Mediterranean ports
than in northern
generally continued to be lower
Europe
and direct handling costs were generally
higher (29). A shipper based in northern Europe faced
with increased prices on northern Europe/Far East
to Mediterranean/Far East
services would not
services unless the prices increased so significantly as to
make it cheaper
inland
transport to a Mediterranean port and the extra costs at
such a port (30).

to pay the extra costs of

shift

the parties

In addition to their argument
that Mediterranean/Far
East services are substitutes for northern Europe/Far East
services,
that operators which
argue
incorporate wayport calls in the Mediterranean en route
to/from northern Europe could increase capacity on
their northern Europe/Far East services by using the
capacity they set aside for Mediterranean/Far East cargo.
The Commission does not consider that an operator,
a northern
having
Europe/Far
incorporates
Mediterranean wayport call, would have been likely to
make a decision at short notice to switch an appreciable
part of the capacity set aside for Mediterranean cargo to

taken a decision to operate
service

which

East

(28) Drewry, Global Container Markets, page 76.
(29) Drewry, Global Container Markets, page 128 and Table 7.9.
(30) See Commission Decision of 19 December 1996, recital 36;
Decision pursuant to Article 6(1)(b) of Council Regulation (EEC)
No 4064/89 of 21 December 1989 on the
control of
concentrations between undertakings,
(OJ L 395, 30.12.1989,
p. 1).

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northern European cargo. If it would have done so, it
would have lost the service advantage of being able to
offer a Mediterranean service whilst still
incurring the
costs of making calls at one or more Mediterranean
ports.

[Trans-Siberian Railway’s] ability to discount fades into
near-insignificance(cid:146) (31). The information available to the
Commission indicates that if included in the relevant
market it accounted for a mere 2 % of traffic.

5.2. Air transport services

(87)

(83) Air transport services (or combined sea-air transport
services) are only appropriate for goods which require
faster transport times, the high value of which permits
higher transport costs to be incurred.

(84) Giving that any shipper is concerned to reduce its
transport costs to the necessary minimum, it will only
incur the additional expense of air transport services if it
is necessary for its goods to be delivered faster than
would be possible if they were carried by sea and if the
value of the goods is sufficiently high to bear the higher
transport costs. In such a case it would not be correct
to say that sea transport services were substitutable for
air transport services. It should be noted that the vast
majority of goods carried eastbound from northern
Europe to the Far East are considered by the parties to
be of low value.

(85)

(86)

5.3. Land transport services and transpacific

services

The Trans-Siberian Railway and services via the Pacific
were available to shippers during the time when the
FETTCSA was in force. However, neither of them can be
considered to have been a suitable substitute for
scheduled maritime transport of containers on the
northern Europe/Far East trade.

It

The Trans-Siberian Railway was not
an efficient
substitute form of transport in the 1990s, a period of
economic and political instability in the countries of the
former Soviet Union.
is understood that volumes
carried on the Trans-Siberian Railway have decreased
considerably since the collapse of the Soviet Union. In
any event,
it is understood that a single 4 000 TEU
vessel carries the equivalent to some 50 train loads of
in length.
(approximately 2,4 kilometres)
1,5 miles
transit
Moreover,
times and insufficient
its
reliability means
it was at best an inefficient
competitor:
(cid:145)The [Trans-Siberian Railway] advertises a
35 to 45-day transit between Rotterdam and Japan but
this is subject to weather conditions in the USSR and
the timing of connections at either end (cid:133). The
[Trans-Siberian Railway] route is usually sold at rates
below all-water (non-Conference) levels, in view of the
supposedly longer transit times. However when, as now,
the
all-water

longer
that

themselves

depressed,

rates

are

no

have

parties

evidence

The
that
furnished
trans-shipments at US ports or rail land bridges account
for material quantities of goods carried between North
Europe and the Far East. Moreover, a US landbridge
service was actually offered by APL in 1991 but was an
ineffective competitor:
(cid:145)While the transit time is good
(28 days),
it is a costly way to do things when the
all-water route can do the same using just one ship and
two lifts. In view of the prevailing eastbound all-water
rates, APL does not currently offer a Europe/Far East
service and while the other direction is limited to
Japan/Europe one gathers that little is actually moving
that way(cid:146) (32).

(88) On the basis of

the
that even if

the Commission
services and
concludes
services via the Pacific were included in the relevant
market, they would not change the market position of
the FETTCSA to any material extent.

foregoing,
land transport

6. COMBINED EFFECT OF THE FEFC, FETTCSA AND EATA

(89)

The Commission considers a purpose of the FETTCSA
to have been to extend the practice whereby members
the FEFC agree common commercial policies on
of
charges and surcharges to the principal non-Conference
lines operating between northern Europe and the Far
East.

(90) Although some members of the FEFC were not party to
the FETTCSA, the system of price-fixing practised by the
FEFC and the fact that the most important members of
the FEFC were parties to the FETTCSA would have
ensured that all members of the FEFC, whether or not
party
the
operating within
geographical
the Agreement would have
benefited from any restrictive effects of the FETTCSA.

FETTCSA,

scope of

the

to

(91)

EATA and

FETTCSA contained

The
provisions
appointing the Director-General and staff of the FEFC as
secretary and secretariat of the respective Agreements
which are identical in all material respects. Their role of
administering the
likely to
reinforce the strong links and increase the exchange of
information between the Conference members and
non-Conference members.

three Agreements was

(31) Containerisation International, May 1991, p. 39.
(32) Containerisation International, May 1991, p. 39.

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7. MARKET SHARES

(95)

(92) According to EATA estimates, the EATA parties had a
market share of some 86 % of all eastbound liner traffic
from north Europe to the Far East in 1991 (33). This
would also have been the market share of the FETTCSA
parties at that time, given that the only EATA member
who was not a member of the FETTCSA was Hyundai
trade until
who did not enter
August 1992 (34). This would have left 14 % of
the
market nominally unaffected by the Agreement. That
figure
relatively
allowance
includes
the
unimportant quantities of
traffic (approximately 2 %)
carried on the Trans-Siberian Railway.

the Europe/Far East

for

an

Table 2: Volumes and market shares in 1991

Containerised cargo on liner vesels eastbound, northern Europe
to Far East

EATA

Others

TEUs

1 447 000

235 000

Total

1 682 000

Source: EATA.
Note:

figure for (cid:145)others(cid:146) includes Trans-Siberian Railway.

%

86

14

100

(93)

The EATA parties have estimated that the comparable
figures to those given for the EATA parties’ market
share in Table 2 were 83,5 % in 1993, 80 % in 1994.
Those figures include the market share of Hyundai, and
the market
(which
included all EATA members except Hyundai) would
have been correspondingly lower.

the FETTCSA parties

share of

First, however,
it is necessary to consider the parties’
the Commission, by discussing each
that
argument
element of potential and actual competition in turn,
separately and one by one, gives the appearance of
having given balanced consideration to each element,
but that the Commission fails to give weight to the
totality of competition presented by the competitive
alternatives.
the parties are
referring to the alleged competitive constraints imposed
by 1. potentially substitutable services, and 2. the actual
and potential competition.

In making this argument

(96)

are

services

Potentially substitutable
considered in
the
recitals 5 to 88 in relation to the definition of
market. As stated in recital 59, the fact that different
products are, to a marginal extent, interchangeable does
not preclude the conclusion that these products belong
to separate product markets. As regards actual and
potential competition, for the reasons stated below the
Commission concludes that the FETTCSA parties were
not subject
to effective competition from actual or
potential competitors whether those competitors are
considered individually or in aggregate.

8.1. Actual competition

(97)

The parties argue that they faced competition in the
direct northern European to Far East eastbound trade
from a number of operators including COSCO/Broad
Remix, CMA, Norasia, Sinopol, Sinotrans and USAC.

8.1.1. Capacity and utilisation

8. COMPETITION IN THE MARKET

(94)

The parties consider that there was significant actual
competition from non-EATA members, and significant
competitive pressure from potential competition (35).
Recitals 95 to 122 assess those claims.

(33) Decision 1999/485/EC (Europe Asia Trades Agreement), at recital

80.

(34) Hyundai entered the trade by way of a vessel sharing agreement

with SeaLand.

(35) In these proceedings the parties have adopted the same arguments
as to market definition and competitive pressures as they put
forward in the EATA proceedings, even though the EATA only
directly covered the eastbound trade whilst the FETTCSA covered
both eastbound and westbound trade. In this section, references to
the parties’ arguments are, unless otherwise indicated, references
to arguments put
forward in their reply to the Statement of
Objections in the EATA proceedings.

(98)

(99)

In their reply to the Statement of Objections in the
the EATA parties provided a list of
EATA case,
the EATA,
containerised operators, not members of
showing their eastbound capacity in 1993.
In order,
however,
the competitive
pressure exerted by actual competitors to the FETTCSA
parties, it is necessary to examine whether the operators
that were not members of FETTCSA had sufficient
capacity to win significant market
share from the
FETTCSA parties.

to get a full picture of

The following chart shows the eastbound (EB) and
westbound (WB) capacity operated by the FETTCSA
lines and by the non-FETTCSA lines. The chart shows
the capacity at the end of 1990 (i.e., shortly before the
FETTSCA dated 5 March 1991), at mid-1992 (i.e., a
year after the entry into the force of the Agreement on
4 June 1991) and at mid-1995 (i.e., a year after the
Agreement was terminated on 10 May 1994).

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Figure 1: Northern Europe/Far East capacity

Capacity end 1990, mid 1992, and mid 1995 in %

100

90

80

70

60

50

40

30

20

10

0

FETTCSA non-FEFC lines

FETTCSA FEFC lines

C
B
A

t
n
e
i
r

O

t
l
a
B

A
C
S
T
T
E
F

l

a
t
o
T

A
S
C
T
T
E
F
-
n
o
n

l

a
t
o
T

l

k
o
o
r
b
o
p
h
C

i

A
M
C

i

p
h
s
t
n
o
C

o
c
s
o
C

C
S
A
U

s
r
e
m
k
c
R

i

i

a
d
n
u
y
H
/
d
n
a
L
-
a
e
S

i

a
s
a
r
o
N
/
d
n
a
L
-
a
e
S

1990 EB

1990 WB

1992 EB

1992 WB

1995 EB

1995 WB

Source: Drewry, Strategy and Profitability in Global Container Shipping 1991, Table, 6.18; Drewry, Container Market Profitability to 1997, 1992, Table 5.12; Drewry,
Global Container Markets, Table 5.16.

(100) The capacity figures in the chart exclude capacity set

aside for Mediterranean/Far East cargo.

introduce new capacity in the 1991 to 1994 period,
and these are considered in recitals 106 to 111.

(101) As shown in figure 1,

the FETTCSA lines’ share of
capacity on the trade was in the 85 to 90 % range in
1991 and 1992. Even if that share subsequently fell, the
FETTCSA lines still had a significant 79 % eastbound
and 77 % westbound share of capacity in mid-1995, a
year after
the FETTCSA had been terminated. The
significance of these figures is that in order to attract
from the FETTCSA lines, direct
significant volumes
competitors would have had to have
introduced
significant new capacity. Certain non-FETTCSA lines did

(102) An alternative way of assessing the significance of the
FETTCSA lines is to consider the number of services
operating a weekly frequency. It is generally accepted
that on a major
is a tremendous
competitive disadvantage for a carrier not to offer a
service (36). As
weekly, preferably fixed-day weekly,
shown in Table 3,
it was the FETTCSA lines which
offered by far the largest proportion of such services in
the 1991/1992 period.

trade

lane

it

(36) See Decision 1999/243/EC (Transatlantic Conference Agreement),

recitals 284 to 286 and 365.

 
 
 
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Table 3: Number of weekly services on northern

Europe/Far East, end 1990 and mid 1992

FETTCSA

Year

FEFC

non-FEFC

non-FETTCSA

Total

End 1990

Mid-1992

6

9

4

4

2

3 (*)

12

16

(*) Includes the POL/CMA joint service; POL was an FEFC and FETTCSA

member, CMA not.

Source: Drewry, Strategy and Profitability in Global Container Shipping,
1991, Table 6.18; Drewry, Container Market Profitability to 1997,
1992, Table 5.12; Lloyd’s Shipping Economist, October 1992, p. 9;
Drewry, Global Container Markets, p. 160.

this

no choice but
to pay the higher rates. The obvious
strategy can be judged from the
success of
September 1991 announcement that the FEFC intended
to impose a second westbound GRI
(General Rate
Increase) (amounting to USD 400 per TEU) within 12
months of the last such rise(cid:146) (37).

(105) The figures given for demand in Table 4 exclude
military traffic and relay/trans-shipment cargo moved
via main trade ports as well as empty containers. They
therefore underestimate actual vessel utilisation. The
figures given for capacity are calculated after deduction
of EATA cap in 1993 and 20 % slot reduction due to
deadweight limitations.

(103) Over the 1991 to 1994 period in which the FETTCSA
the supply/demand balance on the

was
northern Europe/Far East trade was as follows.

in force,

Table

4: Northern

Europe/Far

East

supply/demand

balance, 1991 to 1994

Eastbound

Westbound

(106)

Year

Net
capacity

Demand

Utili-
sation

Net
capacity

Demand

Utili-
sation

(million TEU)

(%)

(million TEU)

(%)

1991

1,26

1,03

81,7

1,68

1,60

95,2

1992

1,52

1,10

72,4

2,02

1,65

81,7

1993

1,53

1,30

85,0

2,36

1,73

73,3

1994

1,92

1,46

76,0

2,57

1,87

72,8

Source: Drewry, Global Container Markets, Table 5.19.

8.1.2. Cosco/Broad Remix

State

In 1991, the largest non-FETTCSA line on the trade was
the Chinese
carrier China Ocean Shipping
Company (Cosco). In 1990/1991, Cosco had a single
string of relatively small (less than 1 500 TEU vessels)
calling at Chinese ports as well as Hong Kong and
Singapore. By 1992, working with a Hong Kong
company BR Line, Cosco offered six sailings a month
still on relatively small vessels (38). In 1993/1994, Cosco
made a great leap forward by introducing new 3 800
TEU vessels and thereby increasing its capacity by 80 %.
This enabled it to offer two strings with six sailings per
month overall, still calling at Chinese ports as well as
Hong Kong and Singapore (39).

(104) Table

4

the

the

shows

eastbound

continuous

imbalance between the

and
westbound growth that took place in demand. It also
shows
eastbound and
westbound demand that is a feature of the northern
Europe/Far East trade. In 1991, the year in which the
FETTCSA Agreement was entered into, westbound
capacity was almost
fully utilised. The 1991 Drewry
report infers that (cid:145)much of the additional westbound
trade this year (1991) will have moved on Conference
the
vessels
non-Conference carriers. This, in fact, accords with the
recent FEFC pricing strategy to press for rate increases
due to the fact that the non-Conference vessels can only
be filled once, and that the residual cargo (which now
almost equates to the total FEFC capacity) would have

space with

limited

due

the

to

it was

(107) Although Cosco was well placed to meet the growing
trade between northern Europe and China and Hong
Kong,
likely to have provided only limited
competition to the FETTCSA lines. First, at least until its
new 3 800 TEU vessels were introduced in 1993/1994,
its service was based on vessels with low speeds and
low TEU capacity. In 1991, the transit time for Cosco’s
Rotterdam/Hong Kong service was 36 days eastbound
and 30 days westbound, as compared to, for example
Hanjin’s 21 days eastbound and westbound or Maersk’s
eastbound and 21 days westbound (40).
24 days
Secondly, Cosco is unlikely in any event to have been
an effective competitor for cargo other than that carried
to and from China, Hong Kong and Singapore. In 1992

(37) Drewry 1991, p. 141.
(38) Lloyd’s Shipping Economist, October 1992, p. 9.
(39) Lloyd’s Shipping Economist, October 1994, pp. 6 to 10.
(40) Containerisation International, May 1991, p. 37; April 1991,

p. 31.

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it lacked space on the westbound leg of its service (41). It
Japan and
also lacked direct calls at ports in Korea,
Taiwan, which made it less likely to have been able to
compete with those FETTCSA lines which had such
direct calls. In 1990, those three countries are estimated
collectively to have generated 56 % eastbound and 57 %
westbound of Europe/Far East cargo (42)

8.1.3. Hyundai

(108) The Korean carrier Hyundai Merchant Marine entered
the trade in September 1992 by introducing the (cid:145)AEX(cid:146)
service in conjunction with Sea-Land and Norasia.
it
Hyundai contributed six 2 640 TEU vessels that
switched
Sea-Land
contributed three 2 600 TEU vessels and Norasia
slot-chartered the equivalent of 50 % of
the space
provided by Sea-Land.

transpacific

from the

trade,

survey of the Europe/Far East trade in October 1992,
likely new
Lloyd’s
capacity on the trade and concluded:

Economist

Shipping

reviewed

(cid:145)However, the general view is that the market will be
much stronger by the mid 1990s, and the extra capacity
might do little more than balance the actual demand.

One additional point to note is that with the arrival of
Hyundai and APL (whose entry was then thought to be
imminent, but whose entry in fact did not occur until
1995), all the major east-west liner operators will be
active in this trade (cid:151) unlike the north Atlantic, where
lines live in constant fear of new entrants from the pool
of highly-qualified global carriers,
there is now little
reason to fret on that score(cid:146) (45).

8.1.4. Other operators

(109) Hyundai’s ambitions

in the
trades were known, and its entry was not

to be a major player

east-west
surprising. Drewry states:

(cid:145)Hyundai was already a major force on the transpacific,
the shippers and
and doubtless found that many of
importers in Asia were common to both trades (cid:151)
indeed this would have been a major factor in its
decision to enter the new market (cid:151) while the size and
type of
infrastructural
sophistication provided, and the scope of inland services
and information systems demanded were all closely
aligned to its existing transpacific operations(cid:146) (43).

tonnage required,

the level of

the

(110) Hyundai joined the EATA and thus the parties do not
mention Hyundai as an actual competitor in their reply
to
EATA
proceedings. By joining the EATA, Hyundai agreed to
limit
its competition with the FETTCSA lines by
participating in the capacity management programme
set up under the EATA.

of Objections

Statement

the

in

(111) The capacity introduced by the AEX service was
significant; Drewry estimates it to have been equivalent
and 6,5 %
eastbound
to 6,9 % of
westbound (44). However,
this must be seen in the
context of
the strong growth in volumes that were
taking place in the trade. Annual growth in demand in
In a
1993 was 18 % eastbound and 5 % westbound.

space

then

POL.

1991,

In May

(112) CMA: The competition offered by the Compagnie
is likely to have been
(CMA)
maritime d’affretement
limited by the nature of its service. In the 1991/1994
period, CMA operated a joint service with POL, a
Conference member and member of the FETTCSA. CMA
is unlikely to have followed a policy of aggresive pricing
against the Conference orientation of its joint service
partner
Containerisation
International reported that (cid:145)Seeing that its consortium
partner POL is already a member, CMA has now applied
to join the (FEFC) too(cid:146) (46). Furthermore, in early 1991
the CMA/POL
when the FETTCSA was entered into,
service offered a only nine-day frequency. Although this
was later increased to a fixed-day weekly service, the
service stopped at a large number of ports and (cid:145)only a
through
minority of boxes are actually carried right
from one end to the other(cid:146) (47). By 1994, CMA had
introduced larger capacity vessels on its service and
chartered slots to the Tonnage-Sharing Agreement of
the Conference lines Nedlloyd/CGM/MISC. Moreover,
CMA is reported to have made a renewed application to
join the Conference (48).

(113) Norasia:

The

joint
Norasia/Sea-Land (cid:145)AME(cid:146) service is likely to have been
limited because of the nature of the service:

competition

offered

the

by

the

Sea-Land

Line
Service
(cid:145)Take
combination, whose weekly sailings from Europe call at
four ports before arriving in the Far East. Its primary
market is actually north Europe to the mid-east and
Indian subcontinent, augmented by cargo from the

and Norasia

(41) Lloyd’s Shipping Economist, March 1992, p. 29.
(42) Drewry 1991, Table 6.20, p. 141.
(43) Drewry, North-South Trades, September 1995.
(44) Drewry 1992, p. 83.

(45) Lloyd’s Shipping Economist, October 1992, p. 10.
(46) Containerisation International, May 1991, p. 35.
(47) Lloyd’s Shipping Economist, October 1992, p. 8.
(48) Lloyd’s Shipping Economist, October 1994, p. 8.

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United States of America
and the Mediterranean
(trans-shipped at Algeciras and Malta respectively).
Indeed, each intermediate call
forms a sub-market
within the overall Europe/Far East intinerary (allowing
slots) and a valuable repositioning
multiple use of
such a compound service
opportunity. But while
achieves much,
straight
in the
its performance
Europe/Far East stakes is necessarily compromised. Also,
with so many ports en route, and a relatively slow (17
knot) speed,
is no wonder that Sea-Land/Norasia
employs 13 ships (of which 10 happen to be furnished
by Norasia); by contrast the Conference consortia use
only eight or nine per end-end string(cid:146) (49).

it

(114) Moreover,

although Norasia

a Conference
its attitude towards strong competition on

is not

member
price has been reported as follows:

(cid:145)Norasia has (cid:133) avoided too much involvement in liner
bodies, with membership of just two open-structured
the
Conferences
Mediterranean to the Middle East. Nevertheless, where
rates are concerned,
is very much a supporter of
it
bodies formed to achieve sensible rate levels(cid:146) (50).

northern

covering

Europe

and

(115) As noted in recital 108, Sea-Land and Norasia also
service

in the

(cid:145)AEX(cid:146)

participated with Hyundai
introduced in September 1992.

8.2. Potential competition

(118) The parties

that

argue

is highly
contestable, and that there was potential for entry and
cross-entry by container operators that were not present
on the northern Europe/Far East trade.

shipping

liner

8.2.1. Contestability

(119) The parties argue that liner shipping is an example of a
market that is highly contestable. Their argument is thus
that the existence of potential competition guaranteed
efficient services at competitive prices. In the TACA and
EATA Decisions, the Commission has found that the
applicability of
the theory of contestable markets to
liner shipping is disputed by many economists, and that
the contestability of markets must be distinguished from
redeployment of vessels (54). The
flexibility in the
that
Commission has concluded in those Decisions
arrangements
rates
(Conferences) or capacity (consortia), or in cartels which
are even more restrictive of competition, including price
agreements between Conference members and outsiders,
cannot be analysed solely and simplistically on the basis
of the contestable market theory. That conclusion also
holds good in this case.

shipping

between

lines

on

(116) Sinotrans: Sinotrans will have offered only very limited
competition because of the low capacity of, and limited
destinations served by,
its northern Europe/Far East
service. In the relevant period it was offering a monthly
service between northern Europe and Hong Kong and
ports in China, using three vessels of between 1 000
and 1 300 TEU (51).

8.2.2. Container ship cross-entry

(120) The parties argue that the Commission has not taken
into account the possibility that lines active on other
trades might enter the northern Europe/Far East trade
(i.e., (cid:145)cross-entry(cid:146) from other trades).

(117) USAC: USAC will also have offered only very limited
competition because although it offered a weekly
service,
its (cid:145)figure-of-eight operation has been sewn
together from separate services from Europe and the Far
East into the Gulf, and cargo to/from south Asia and the
Mediterranean is also being carried on the ships(cid:146) (52).
Only a small number of its slots are estimated to have
been used for northern Europe/Far East cargoes (53).

(121) Cross-entry onto the northern Europe/Far East trade, a
major east-west trade, is most likely to have come from
the major global carriers not yet present on the trade. In
1991 Drewry identified 18 (cid:145)global carriers(cid:146) by reference
to factors such as their size, presence on east-west trade,
commercial orientation and assets (55). A further three
carriers were identified as candidates for global carrier
status (56). Of those 21 actual and almost global carriers,

(49) Containerisation International, May 1991, p. 35.
(50) Lloyd’s Shipping Economist, May 1994, p. 17.
(51) Lloyd’s Shipping Economist, October 1992, pp. 7 and 9; October

1994, pp. 8 and 10.

(52) Lloyd’s Shipping Economist, October 1992, p. 8.
(53) Lloyd’s Shipping Economist, October 1992, pp. 7 and 8; Lloyd’s

Shipping Economist, October 1994, p. 8.

(54) Decision 1999/243/EC (Transatlantic Conference Agreement),
recitals 350 to 357; Decision 1999/485/EC (East Asia Trades
Agreement), recitals 125 to 132.
(55) Drewry 1991, Table 2.7, p. 31.
(56) Drewry, 1991, p. 30. Lloyd’s Shipping Economist, November
1992, pp. 18 and 19, identified 19 (cid:145)leading global carriers(cid:146) which
did not include ACL and MISC from Drewry’s list.

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15 were FETTCSA members and only three have not
already been discussed above as actual competitors:
Atlantic Container Line (ACL), American President Line
(APL) and Zim.

9.2. Currency adjustment factor (CAF)

(122) ACL is and was a line only active on the north Atlantic.
Zim did operate a southern Europe Far East service at
the relevant time, but the focus of its service in Europe
was in southern rather than northern Europe. APL was
thus the only global carrier not present on the trade but
which was considered likely to enter. Lloyd’s Shipping
Economist was thus able to reach its conclusion in
October 1992 (quoted in recital 111)) that operators on
the Europe/Far East trade had little reason to fear new
entrants
from the pool of highly-qualified global
carriers.

(127) A CAF is a price adjustment made by a carrier in order
to compensate for fluctuations in the exchange rates
between the currency in which the carrier charges
shippers and the currencies in which the carrier incurs
its costs. A Conference’s CAF is based on the weighted
effect of the movements of the currencies in which each
line earns its revenues and/or incurs its expenses against
the tariff currency. To the extent that a CAF is applied
to the price of each of maritime transport, port services,
and inland transport, a restrictive agreement as to a CAF
falls within the scope of application of respectively
Regulation (EEC) No 4056/86, Regulation No 17 and
Regulation (EEC) No 1017/68.

LEGAL ASSESSMENT

9.3. Terminal handling charges (THC)

9. THE APPROPRIATE REGULATIONS

(123) The charges and surcharges which are covered by the
FETTCSA concern maritime transport services which fall
within the scope of Regulation (EEC) No 4056/86, rail,
road and inland waterway transport services (or services
ancillary thereto)
fall within the scope of Regulation
(EEC) No 1017/68 and services which fall within the
scope of neither of those two Regulations therefore fall
within the scope of Regulation No 17.

(124) The Commission has in this case applied the procedures
applicable under Regulations (EEC) No 1017/68 and
(EEC) No 4056/86, as well as those of Regulation No
17. Thus, even if the Commission were wrong in its
identification of the Regulation(s) applicable to each of
the charges and surcharges, the parties have had the
benefit of the procedural safeguards provided for by all
possibly applicable Regulations.

(125) The Commission considers that the main charges and
the different

fall within the

scope of

surcharges
Regulations as follows.

9.1. Bunker adjustment factor (BAF)

(126) A BAF is a price adjustment made by a carrier to reflect
the current cost of bunkers (i.e. ship’s fuel) against a
base level
incorporated in the freight rate. The BAF
relates to maritime transport, and therefore a restrictive
agreement as
scope of
falls within the
application of Regulation (EEC) No 4056/86.

to BAFs

to or

(128) A THC is a charge made by a carrier in order to cover
certain costs incurred by the carrier at a port, including
receiving/delivering a container, inspecting a container,
handling a container within the port area and moving a
container
from the ship. The handling of
containers at a port (possibly in combination with other
services such as inspection and storage) at least in part
contitutes stevedoring and other cargo-handling services
within the port which are not maritime transport
services as such (57). Therefore a restrictive agreement as
to THCs
least partly within the scope of
application of Regulation No 17 and not Regulation
(EEC) No 4056/86. To the extent that an agreement as
to a THC has as its object or effect the fixing of rates
and conditions for inland transport, Regulation (EEC)
No 1017/68 and not Regulation No 17 will be
applicable (58).

falls at

9.4. Less-than-container-load (LCL) service charges

(129) An LCL service charge is a charge made by a carrier in
order to cover certain costs incurred by the carrier
where the goods to be shipped are less than a full
container load. The additional costs associated with
less-than-container-load
of
receiving/delivering loose goods, packing/unpacking the
goods into/from a container, and administration. These
operations are cargo-handling services within the port
they are not maritime transport
or

terminal area;

include

goods

those

(57) See,

in relation to cargo-handling at airports, Commission
(Flughafen

Decision
Frankfurt/Main AG), (OJ L 72, 11.3.1998, p. 30.).

98/190/EC

January

1998

14

of

(58) See Case C-246/95 P Commission v UIC [1997] ECR I-1287, point

42.

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Official Journal of the European Communities

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services as such. Therefore, a restrictive agreement as to
LCL service charges falls within the scope of application
of Regulation No 17 and not Regulation (EEC) No
4056/86. To the extent that an agreement as to an LCL
service charge has as its object or effect the fixing of
rates and conditions for inland transport, Regulation
(EEC) No 1017/68 and not Regulation No 17 will be
applicable (59).

9.5. Detention and demurrrage charges

in

of

for

the

cargo

taking

beyond

prescribed

(130) These are charges paid by shippers for respectively
cargo and/or equipment kept beyond the freetime
allowed
the
receipt
port/terminal/container yard, and for detaining carriers’
containers/chassis
freetime
period. These operations can be considered equivalent
to respectively
and equipment hire
services;
they are not maritime transport services as
such. Therefore, a restrictive agreement as to such
application of
charges
Regulation No 17 and not Regulation (EEC) No
4056/86. To the extent
to
detention or demurrage charges has as its object or
effect
the fixing of rates and conditions for inland
transport, Regulation (EEC) No 1017/68 and not
Regulation No 17 will be applicable (60).

that an agreement as

falls within the

cargo-storage

scope of

are

carrier. Charges
a potentially
and surcharges
significant part of the overall price paid by shippers. An
agreement not to discount off published prices restricts
price competition contrary to Article 81(1)(a), even if
the parties to such an agreement do not expressly agree
on the level of their published prices (61).

(134) An agreement between the parties not

to grant
discounts from published levels significantly reduces the
ability of lines to compete with regard to the final price
charged to shippers. The ocean freight and inland
haulage may be less than half of the price paid by the
in which case the scope for
shipper
discounting in relation to the overall price is reduced.
This amounts
restriction of price
competition.

to a significant

in question,

(135) The parties have pointed out, correctly,

It

that

is however sufficient

the
Commission is not putting forward evidence relating to
actual price levels.
the
application of Article 81(1) that an agreement has the
object of restricting competition (62). It is not necessary
to show that such an agreement was put into effect,
the agreement, where
although the actual effects of
these can be demonstrated, may be relevant
to the
amount of any fine.

for

10. ARTICLE 81(1) OF THE EC TREATY AND ARTICLE 2 OF

REGULATION (EEC) No 1017/68

(131) For the reasons set out

in recitals 132 to 144,

the
Commission considers that the parties infringed Article
81(1)(a) of the Treaty and Article 2(a) of Regulation
(EEC) No 1017/68 by agreeing, within the framework of
the FETTCSA, not to discount from published tariffs for
charges and surcharges.

10.1. Article 81(1): restriction of competition

(132) The stated purpose of the FETTCSA (see recitals 22 to
the calculation of
27) was to create standards for
common
charges
and surcharges,
mechanism for
and
surcharges. Provisions in the Agreement mirrored the
wording of Article 2(1)(f) and (c) of Regulation (EEC) No
4056/86 relating to (cid:145)technical agreements(cid:146).

and to use

calculation

charges

the

of

a

(133) As described in recitals 35 to 39, the parties agreed not
to discount off published rates
and
surcharges, whether those rates were published as part
of an FEFC tariff or were published by an individual

charges

for

(59) Commission v UIC, point 42.
(60) Commission v UIC, point 42.

(136) As stated in recital 36, the Commission is unconvinced
by the parties’ contention that there was no more than
an agreement to stop charging (cid:145)net-all-in(cid:146) rates (cid:145)for the
purpose of providing clarity to shippers(cid:146) (63). However,
the fact that there were such (cid:145)net all-in(cid:146) rates, which the
parties admit to agreeing that they would avoid offering
in the future, is itself evidence that competition over the
the
level of charges and surcharges existed and that
intention of the FETTCSA parties was to eliminate or at
least reduce such competition.

(137) Furthermore, an agreement not

to charge (cid:145)net all-in(cid:146)
rates has the effect of increasing price transparency to
the detriment of competition. It is less easy effectively to

(61) Commission Decision

between
74/292/EEC
manufacturers of glass containers) (OJ L 160, 17.6.1974, p. 1),
(recitals 35 and 36; Commission Decision 75/497/EEC (IFTRA
rules for producers of virgin aluminium)(OJ L 228, 29.8.1975, p.
10).

(Agreements

(62) Joined Cases 56 and 58/64 Grundig and Consten v Commission
[1966} ECR 299, p. 342; Case T-35/92 John Deere Ltd v
Commission [1994] FCR II-0957, point 61, Joined Cases T-305/94
etc. LVM and others v Commission [1999] not yet published in the
ECR, point 741; Commission Decision 84/405/EEC (Zinc Producer
Group)
(OJ L 220, 17.8.1984, p. 27), point 71; Commission
Decision 1999/210/EC (British Sugar) (OJ L 76, 22.3.1999, p. 1),
point 75.

(63) Reply to Statement of Objections, point 2.11.

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monitor a competitors’ pricing when it offers (cid:145)all-in(cid:146)
rates than when it offers rates broken down into their
component parts.

(138)

It is clear from the eighth recital
in the preamble to
Regulation (EEC) No 4056/86 that external competition
to Conferences is an essential
factor so far as the
granting of
the group exemption is concerned. As
described in recitals 15 and 18, the FEFC lines had in
1991 a combined market share of 58 % and they agree
common rates for their services. In the face of such a
large part of the supply being offered at agreed prices, it
is especially important
there remains effective
that
competition from non-Conference lines. Agreements
such as the parties’ agreement not to discount enable
the members of a Conference to extend their market
power by engaging in anticompetitive behaviour
in
common with shipping lines which are not members of
the Conference. Such agreements
in general,
intended to eliminate competition for a substantial part
of the services provided in the market in question.

are,

(139) The potential effect of the parties’ agreement not to
discount is likely to have been appreciable in view of
the high market share of the parties on the relevant
market.

those ports.

to enjoy increases in market share may also have
in different
influenced competition between ports
Member States, by artificially extending or diminishing
their catchment areas and the market shares of shipping
lines operating out of
In particular,
shipping lines operating out of more efficient ports
would not have passed on to their customers cost
savings
resulting from improvements made in port
efficiency (65). The effect that the Agreement had on the
normal play of competitive forces may also have
changed the capacity available at each port and caused
deflections of trade between points in Europe and ports
in northern Europe from some ports to other ports and
in so doing be capable of affecting trade between
Member States.

(142) The effect on the supply of maritime transport services
described in recitals 140 and 141 is likely to have had a
consequential effect on the supply of services ancillary
to the supply of maritime transport
services. Such
services include the services of freight forwarders, port
stevedoring
services,
services. The effect on these services would principally
have been brought about by the alteration in the flow
of transport services between Member States.

transport

services,

land

and

10.2. Article 81(1): effect on inter-State trade

(143) The Commission therefore considers that

the parties’
agreement not to discount was such that it could have
an appreciable effect on trade between Member States.

(140) The agreement not to discount involved Conference and
non-Conference lines operating in several Member States
and aimed to restrict competition between such lines in
respect of the prices they charged for the services they
offer. The diminution of price competition between
these companies was likely to reduce the advantages
which would otherwise accrue to the more efficient of
them. This was likely to affect
in turn the normal
pattern of losses and gains of market share which would
have been expected in the absence of the Agreement.
This
restriction of competition between shipowners
operating in many Member States was consequently
likely to influence and alter trade flows in transport
services within the common market, which would have
been different in the absence of the Agreement.

(141)

In addition, restrictive practices concerning international
maritime transport from or to Community ports may
affect trade between Member States because they are
capable of affecting competition, firstly, between ports
in different Member States by altering their respective
catchment areas, and secondly, between activities in
those catchment areas (64). The changes brought about
by the Agreement in the normal pattern of competitive
behaviour by which more efficient companies are likely

(64) See the sixth recital to Regulation (EEC) No 4056/86.

10.3. Article 2 of Regulation (EEC) No 1017/68

(144) Article 2 of Regulation (EEC) No 1017/68 is based on
the
and reflects the provisions of Article 81(1) of
Treaty (66).
from the substantive
content of Article 81(1) and the reasons given in recitals
132 to 143 as to the applicability of Article 81(1)
accordingly apply equally to the applicability of Article
2 of Regulation (EEC) No 1017/68.

It does not depart

(65) Drewry has described the mid-1992 use of ports on the north
(cid:145)The port rotation in northern
Europe/Far East trade as follows:
show considerable rotation between competing
Europe does
carriers, not just in the selection of ports (e.g. Southampton or
Felixstowe in the United Kingdom, and Hamburg or Bremerhaven
in Germany) but also in the sequence in which they are called.
Furthermore the perennially thorny question of whether to make
single or double calls is answered differently by different carriers
(cid:133)(cid:146). Drewry, Container Market Profitability to 1997, December
1992, p. 135.

(66) Commission Decision 93/174/EEC (Tariff

in the
combined transport of goods)
(OJ L 73, 26.3.1993, p. 38) as
amended by Decision 93/354/EEC, (OJ L 145, 17.6.1993, p. 31),
recital 15.

structures

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11. ARTICLE 2(1) OF REGULATION (EEC) No 4056/86

(TECHNICAL AGREEMENTS)

achievement of
cooperation.

technical

improvements or technical

(145) The

parties

consider

activities within

the
their
framework of the FETTCSA to have been exempt from
Article 81(1) pursuant to Article 2(1)(f) of Regulation
(EEC) No 4056/86 which provides,
inter alia, that the
(cid:145)prohibition laid down in (Article 81(1) (cid:133) shall not
apply to agreements (cid:133) whose sole object and effect is
improvements or cooperation by
to achieve technical
the establishment or application of
means of (cid:133) (f)
uniform rules
and the
conditions governing the application of transport tariffs(cid:146).
The Commission disagrees. The parties’ activities within
the framework of the FETTCSA went beyond activities
consistent with a
agreement within the
meaning of Article 2(1). Nor was the parties’ agreement
not to discount such a technical agreement.

concerning

technical

structure

the

11.1. Declaratory nature of Article 2(1)

(146) The only way that Article 81(1) can be declared
inapplicable to an agreement falling within its scope is
by way of exemption under Article 81(3). Article 2(1) of
Regulation (EEC) No 4056/86 cannot be considered a
block exemption: it is neither stated to be an exemption
nor does the Regulation contain any reasoning as to the
four conditions of Article 81(3) (67). Article 2(1) must
therefore be considered merely declaratory:
lists a
number of different kinds of agreement which do not
fall within the scope of Article 81(1) of the Treaty when
their sole object and effect
is to achieve technical
improvements or technical cooperation.

it

to

be

some

referring

construed

(147) Moreover, the meaning of the words (cid:145)as a general rule(cid:146)
in the seventh recital should be noted. These words
cannot
individual
as
effects which are
agreements which have
restrictive of competition but which do not restrict
competition very much or very often. They can only be
construed as referring to types of agreement which are
considered to be usually wholly neutral with regard to
competition: in the event that a particular example of
one of
these types of agreement was restrictive of
competition it would not fall within the scope of Article
2(1) since its sole object and effect would not be the

(67) Contrast

the seventh recital of Regulation (EEC) No 4056/86,
which relates to Article 2(1), ((cid:145)Whereas certain types of technical
agreements, decisions and concerted practices may be excluded
from the prohibition on restrictive practices on the ground that
they do not, as a general rule, restrict competition;(cid:146)) with the
eighth recital, which relates to the block exemption provided for
by Article 3,
((cid:145)Whereas provision should be made for a block
exemption of liner conferences; (cid:133)(cid:146)): The eighth recital contains
reasons as to why the four conditions of Article 85(3) are
considered to be fulfilled.

(148) The parties have stated that

they agree that any
agreement which is restrictive of competition within the
meaning of Article 81(1) is not a technical agreement
for the purposes of Article 2(1) of Regulation (EEC) No
4056/86 and is not to be regarded as being excluded
from the application of Article 81(1) by virture of
Article 2(1) of that Regulation.

11.2.

(cid:145)Sole object and effect(cid:146)

(149) The parties have stated that they agree that the use of
the adjective (cid:145)sole(cid:146)
limits its scope to
in Article 2(1)
agreements, decisions and concerted practices whose
only object
(cid:145)technical
improvements or cooperation(cid:146) by the means identified
in the subsequent paragraphs of that Article.

to achieve

effect

and

is

(150) The Court of

First

nature

cannot

technical

Instance has held that

the
introduction of a legal exception for agreements of a
purely
an
authorisation, on the part of the Community legislature,
allowing agreements to be concluded whose purpose is
the joint fixing of prices (68). The same principle applies
where an agreement constitutes some other restriction
of competition, such as a restriction on the freedom of
manufacturers to differentiate their products (69).

amount

to

(151) An agreement not to offer discounts from a substantial
portion of prices charged in a particular trade cannot be
said to be an agreement the sole object and effect of
which is to achieve technical improvements or technical
cooperation. This is consistent with the seventh recital
of Regulation (EEC) No 4056/86 since agreements
between competitors restricting their freedom to set
prices do as a general rule have a restrictive effect on
competition.

11.3. Article 2(1)(f): the structure and conditions of

transport tariffs

(152) Article 2(1)(f) of Regulation (EEC) No 4056/86 refers to
(cid:145)the establishment or application of uniform rules
concerning the structure and the conditions governing
the application of
tariffs(cid:146). The parties have
stated that they agree that Article 2(1)(f) would only
apply to the extent that there was no influence on price
or other contractual conditions in relation to which

transport

(68) See Case T-229/94 Deutsche Bahn AG v Commission [1997] ECR
II-1689, at paragraph 37, in relation to the similar exception for
technical agreements provided for in Article 3 of Regulation (EEC)
No 1017/68.

(69) Commission Decision 86/399/EEC (Roofing Felt),

(OJ L 232,
19.8.1986, p. 15). Commission Decision upheld in Case 246/86
Belasco v Commission [1989] ECR 2117.

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competition can exist, and that the types of conditions
referred to in Article 2(1)(f) do not include conditions as
to the level of prices, the timing of the implementation
of price changes, or an agreement not
to grant
discounts in respect of part of the price for a given
service.

and CAF Line 1.(cid:146) The Commission concludes that the
parties discussed a proposal that the independents who
were members of
the FETTCSA should include their
own costs to the calculation of a single level of BAF and
CAF to be applied both by the Conference members and
by the independents.

or

technical

improvements

(153) The examples given in Article 2 concern types of
if their sole object and effect is to
agreement which,
achieve
technical
cooperation, do not generally fall within the ambit of
Article 81(1). Since an agreement between competitors
as to prices will almost invariably fall within Article
81(1) where there is an effect on inter-State trade, the
type of conditions referred to in Article 2(1)(f) cannot
include conditions as to the level of prices (70) or the
timing of
changes.
Furthermore,
the language of Article 2(1)(f), which
refers to (cid:145)the conditions governing the application of
transport tariffs(cid:146), makes it plain that a transport tariff
its own
cannot
application.

implementation of price

condition governing

also be

the

a

(154) Charges and surcharges are an integral part of the final
cost presented to a shipper (71). An obligation not to
grant discounts in respect of part of the price for a
given service is not an agreement as to conditions
governing the application of transport tariffs within the
meaning of Article 2(1)(f), but is an agreement on the
level of prices to be charged.

that

and by

argument

they merely

the Conference members

is inconsistent with the notes of

(155) As described in recitals 42 to 48, the parties discussed
calculating a single level of BAF and CAF to be applied
both by
the
independents who were members of the FETTCSA. The
discussed
parties’
methodology, and not a suggested common level of
BAF and CAF,
the
meeting of 30 September 1991. The notes state (cid:145)that
simply adopting a similar methodology to the FEFC
could lead to each independent calculating its own quite
separate levels of BAF and CAF(cid:146). The notes
then
consider that prospect as likely to lead to criticism from
shippers. The notes then conclude by stating (cid:145)In this
respect and as even the Secretariat do not see the
detailed input from the lines, only the averaged results,
the thought was expressed that the independents might
eventually consider putting in their own figures to the
independent accountants at least in an exploratory way
in order to arrive at overall Far Eastern bunker offtakes

(70) See Decision 93/174/EEC (Tariff
transport of goods), recital 47.

structures

in the combined

(71) Letter from FETTCSA to the Commission dated 19 October 1992,

point 10.

levels of charges. Moreover,

(156) The introduction to the relevant paragraph of the notes
this early
((cid:145)Although it was fully appreciated that at
stage of FETTCSA, the Committee’s function is to study
and search for a common methodology for calculating
accessorial charges,(cid:146))
is drafted in such a way as to
imply that the author was aware that the conclusions
that were in fact reached went further than seeking a
common methodology. The concluding statement
is
expressed as a solution to criticism that could be
expected from shippers if a single methodology led to
different
the concluding
statement refers to the independents providing their
figures to (cid:145)the independent accountants(cid:146). This can only
be a reference to the independent firm of accountants
referred to earlier in the notes to whom the Conference
lines provide their individual costs data for the purpose
of calculating Line 1 of
the
discussion within FETTCSA really was merely about
methodology, the independents would merely apply an
agreed mathematical
formula to their own costs and
there should be no question of supplying those costs to
independent accountants for the purposes of arriving at
(cid:145)overall Far Eastern bunker offtakes and CAF Line 1(cid:146)
(emphasis added).

the Conference CAF.

If

11.4. Article 2(1)(c): the establishment or

application of inclusive rates and conditions

(157) The parties also initially considered that the FETTCSA
was covered by Article 2(1)(c) of Regulation (EEC) No
4056/86 which provides, inter alia, that the (cid:145)prohibition
laid down in (Article 81(1)) (cid:133) shall not apply to
agreements (cid:133) whose sole object and effect is to achieve
technical improvements or cooperation by means of (cid:133)
the organisation and execution of successive or
(c)
supplementary maritime transport operations and the
establishment or application of
inclusive rates and
conditions for such operations(cid:146). The parties abandoned
that argument and have stated that they consider that
the standardisation objective envisaged by FETTCSA
does not fall within Article 2(1)(c).

(158) Although the parties no longer rely on the argument, it
is useful for the Commission to state its view that the
activities and objectives odf the FETTCSA do not fall
within Article 2(1)(c) of Regulation (EEC) No 4056/86.

(159) First, Article

2(1)(c)

or
supplementary maritime transport operations(cid:146).
It does
not refer to and cannot be construed as referring to
i.e.
successive or supplementary transport operations,

(cid:145)successive

refers

to

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It

is

therefore clear

that
and services

transport operations which are not exclusively maritime
the provision
in nature.
ancillary
concerns
to
trans-shipment
successive services
trans-shipment. The providers of
would not as a general rule be competitors of
the
providers of the initial or principal maritime transport
operation and for that reason agreements relating to
such services would not generally fall within the scope
of Article 81(1).

(160) Secondly, the joint calculation of a charge or surcharge
which is
intended to reflect additional expenditure
incurred by individual shipping lines cannot be said to
be the establishment or application of inclusive rates
transport
and conditions
operation. Moreover, the expression (cid:145)the establishment
or application of
inclusive rates(cid:146) does not mean the
same as and does not cover the joint setting of certain
specific elements contained in such rates.

through maritime

for

a

11.5. Article 3 of Regulation (EEC) No 1017/68

(technical agreements)

(161) Article 3(1)(c) and 3(1)(g) of Regulation (EEC) No
1017/68 is
similarly worded to respectively Article
2(1)(c) and 2(1)(f) of Regulation (EEC) No 4056/86. The
views of the Commission set out above in relation to
the applicability of Article 2 of Regulation (EEC) No
4056/86 to the parties’ activities within the framework
of
to the
FETTCSA apply, mutatis mutandis
applicability of Article 3 of Regulation (EEC) No
1017/68. The inapplicability to the parties’ activities
within the framework of the FETTCSA of Article 3(1)(g)
of Regulation (EEC) No 1017/68 is especially clear since
the latter expressly states that
is only applicable
(cid:145)provided such rules do not lay down transport rates
and conditions(cid:146).

the

it

12. ARTICLE 81(3) EC AND ARTICLE 5 OF REGULATION

(EEC) No 1017/68

12.1. Applicability of Article 3 of Regulation (EEC)

No 4056/86

(162) Neither the FETTCSA itself nor the agreement not to
discount constituted an agreement or arrangement
within the framework of which the parties to the
FETTCSA operate under uniform or common rates. The
parties were therefore not a liner conference within the
meaning of Article 1(3)(b) of Regulation (EEC) No
4056/86. The block exemption contained in Article 3 of
Regulation (EEC) No 4056/86 is not applicable since it
only applies to liner conferences as defined in Article
1(3)(b).

12.2. Article 81(3): individual exemption

(163) No application for individual exemption has been made
in respect of any agreement made within the framework

of the FETTCSA. However, in view of the Commission’s
obligation pursuant to Article 11(4) of Regulation (EEC)
No 4056/86 to issue a decision applying Article 81(3)
where, whether acting on a complaint received or on its
own initiative, it concludes that an agreement, decision
or concerted practice satisfies the provisions both of
Article 81(1) and of Article 81(3) (72), it is necessary to
consider whether the agreement not to discount meets
the conditions for an individual exemption.

(164)

In their
reply to the Commission’s Statement of
Objections, the parties put forward no arguments as to
whether the conditions for an individual exemption are
met in this case. The parties merely argued that there is
no evidence to support any finding that Article 81(1)
was infringed and that accordingly the Commission was
an individual
not
to consider whether
the
exemption could be granted. On the basis of
material in the Commission’s file including the lengthy
and detailed explanations supplied by the FETTCSA and
the
FEFC
Commission (73),
the
conditions of Article 81(3) are not satisfied.

the Commission considers that

correspondence with

secretariats

required

in

12.2.1.

Improving production or distribution or promoting
technical or economic progress

(165) The FEFC has argued:

(cid:145)We are only trying to create an industry standard, in a
way similar to recording equipment manufacturers who
came to a common agreement as to the size and design
of music cassettes: their agreement has not resulted in
similar prices being set by all cassette manufacturers,
cassettes which
but
correspond to an industry-wide standard size and
design(cid:146) (74).

all manufacturers

produce

(166) The parties’ agreement not

to discount cannot be
considered beneficial. It certainly cannot be compared to
the establishment of uniform sizes for such products as
from promoting
cassette
economic progress, even the parties’ admitted agreement
not to offer net all-in contracts was intended to restrict
such progress by preventing lines from entering into
diverse forms of contracts with their customers.

Furthermore,

tapes.

far

(72) Article 11(4) of Regulation (EEC) No 1017/68 makes the same
provision in respect of Article 2 and Article 5 of Regulation (EEC)
No 1017/68.

(73) See in particular letters to the Commission dated 30 July 1991
(FEFC/FETTCSA), 7 October 1991 (FEFC/FETTCSA), 21 October
1991 (FEFC), 23 December 1991 (FEFC/FETTCSA), 14 July 1992
(FETTCSA), 19 October 1992 (FETTCSA), 4 May 1993 (FETTCSA).
(74) Letter from FEFC to the Commission dated 21 October 1991,

point 7.

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12.2.2. Whether consumers receive a fair share of the

resulting benefits

elements of a freight tariff, such as inland freight, THCs
to differentiate from those
and sea freight
elements of tariffs which the liner operator controlled
and those which he did not(cid:146) (77).

so as

(167) The FEFC has made the following claims in respect of

the FETTCSA:

in greater

(cid:145)[It] would result
transparency in the
presentation of tariffs and will enable a transport user to
identify these elements of the tariff which are dependent
on common external factors over which carriers have
little or no control
(e.g. currency movements) while
clearly identifying the tariff elements, which reflect the
relative efficiency and competitivity of carriers (i.e. sea
freight)(cid:146) (75).

identifying the
(cid:145)The advantages to transport users of
common and (cid:147)central(cid:148) elements in a tariff so that the
relative
is
highlighted are obvious: these are transparency between
costs incurred and price offered to the consumer and
clarity of tariff for ease of use(cid:146) (76).

efficiency and competitivity of

carriers

(168) The parties make other claims that their behaviour was
for the benefit off shippers: that the admitted agreement
not
to offer net all-in contracts was made (cid:145)for the
purpose of providing clarity to shippers(cid:146) (see recital 36).

that price

(169) The parties’ agreement not to discount did not bring
any benefits to consumers. The Commission does not
agree
transparency necessarily benefits
consumers. It is necessary to consider the structure of
the market
in question, and to distinguish between
transparency between competitors (which can result in
an alignment of prices at levels higher than they would
otherwise
between
and
suppliers and consumers. Increased price transparency
between suppliers and consumers is not of benefit to
consumers when it is accompanied by a lessening of
price competition.

transparency

been)

have

(171) What is thought useful is not necessarily indispensable.
Even if the price transparency was considered beneficial,
it was not indispensable for the FETTCSA parties to
enter into an agreement not to discount from published
tariffs.

12.2.4. Whether there is an elimination of competition for a
substantial part of the services in question

(172) According to the FEFC:

from eliminating or

(cid:145)Far
reducing competition, any
agreement resulting from the FETTCSA will actually
increase
the
transport user will be able to identify more easily the
relative freight prices quoted by carriers and thus
compare tariffs to negotiate the best possible price(cid:146) (78).

between carriers

competitivity

since

(173) The assertions of

the FEFC and FETTCSA must be
viewed in the light of the price restrictions arising under
the FEFC, the fact that the parties to the FETTCSA are
also party to the EATA (recitals 11 to 14), and the very
high market shares of the parties to the FETTCSA.

(174)

the

fact

that

case, however,

the
In the present
Commission is not putting forward evidence as to actual
price levels and the fact that the first three conditions of
Article 81(3) of
in any event,
fulfilled, leads to the conclusion that it is not necessary
for the Commission to adopt a formal position as to the
fourth condition of Article 81(3).

the Treaty are not,

12.2.3. Whether restrictions of competition are indispensable

(170) The FETTCSA parties have claimed that:

12.3. Article 5 of Regulation (EEC) No 1017/68

(cid:145)There are a number of different ways of calculating
(and then setting) the charges and surcharges used by
different carriers. In order to increase the transparency
of tariffs, it was thought useful by the liner operators to
identify clearly and separately the various component

(175) Article 5 of Regulation (EEC) No 1017/68 is based on
and reflects the provisions of Article 81(3) of the Treaty.
The reasons given in recitals 163 to 174 as to why the
FETTCSA does not qualify for exemption under Article

(75) Letter from FEFC and FETTCSA to the Commission dated 30 July

(77) Letter from FETTCSA to the Commission dated 19 October 1992,

1991, point 15.

point 2.

(76) Letter from FEFC and FETTCSA to the Commission dated 30 July

(78) Letter from FEFC and FETTCSA to the Commission dated 30 July

1991, point 26.

1991, point 20.

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81(3) apply equally to the question of
individual
exemption pursuant to Article 5 of Regulation (EEC) No
1017/68.

13. FINES

the parties had

(176) The parties argue that any infringement that might arise
out of the parties entering into the FETTCSA itself was
unintentional because
reasonable
grounds to believe that the FETTCSA was a technical
falling within Article 2(1)(f) of Regulation
agreement
(EEC) No 4056/86, including legal advice to that effect.
They therefore consider that there was no intentional or
negligent infringement as is required, under Regulations
(EEC) No 4056/86, (EEC) No 1017/68 and No 17, for
the
the imposition of
Commission has not in any event demonstrated that
there were any effects on competition between the FEFC
members and independent lines.

fines. The parties argue that

to discount

(177) The Commission considers that the parties’ agreement
not
considered intentional
should be
because the parties cannot have been unaware that an
agreement not
intended to
restrict competition in particular as between the FEFC
and the non-Conference lines.

to grant discounts was

(178)

It is appropriate to impose a fine in order to ensure that
this Decision has the necessary deterrent effect. Only a
fine is both punitive and preventive in character (79).

13.1. Basic amount of fine

(EEC)

4056/86

empower

(179) Article 15(2) of Regulation No 17 and Article 19(2) of
the
No
Regulation
Commission to impose fines, within stated limits, on
undertakings which have infringed Article 81(1) either
intentionally or negligently. Article 22(2) of Regulation
(EEC) No 1017/68 makes equivalent provision for
infringements of Article 2 of Regulation (EEC) No
1017/68. In fixing the amount of the fine, regard shall
be had to both the gravity and duration of
the
infringement.

(180) The FETTCSA entered into force on 4 June 1991. The
agreement not to discount was entered into on 9 June
1992 to take effect on 1 July 1992. Although the
FETTCSA was terminated only on 26 May 1994 (after
the Commission adopted a Statement of Objections), the

(79) Joined Cases T-305/94 etc. LVM and others v Commission, point

1166.

by

sent

1992

last meeting of the FETTCSA parties was held on 8
September 1992 shortly before the letter dated 28
September
Commission’s
Directorate-General for Competition. For the purposes
of
the Commission
considers it appropriate to consider the duration of the
infringement as having ended on 28 September 1992.
The duration of the infringement should therefore be
considered to be three months.

fixing the amount of

the fine,

the

(181) The agreement not

serious

Conference members

to discount was a horizontal
agreement aiming to restrict price competition between
undertakings with a high market share. A restrictive
between
agreement
and
independent
lines is particularly serious in the liner
shipping sector where the existence of actual and
potential competition from non-Conference lines is one
of the principal justifications for the group exemption.
An agreement not to discount from published prices is,
however, a less
form of horizontal price
agreement than an agreement fixing the level of prices.
Horizontal price agreements will normally be considered
very serious infringements.
In this case, however, the
Commission has not obtained any evidence as to the
effects of the infringement on price levels. Any harmful
effects are in any event likely to have been short-lived. It
is therefore appropriate that the infringement should be
considered serious and that the basic level of fine be set
at the very lowest end of the scale of fines appropriate
for a serious infringement. In the circumstances of this
case it is appropriate to set a basic level of fine, for the
largest of the FETTCSA parties, at EUR 1 300 000.

(182)

In order to take account of the effective capacity of the
undertakings concerned to cause significant damage and
the need to ensure that the amount of the fine has a
sufficiently deterrent effect the Commission considers it
appropriate that larger fines be imposed on the larger
FETTCSA parties than on the smaller ones because of
It has
the considerable disparity between their sizes.
therefore divided the parties into four groups according
to size.

as

largest of

(183) Table 5 indicates these four groups and relative size of
each of the FETTCSA parties in 1994 (the year in which
the FETTCSA was
compared with
abandoned)
Maersk,
the FETTCSA parties. The
the
comparison is made on the basis of turnover in respect
of
carriage of
containerised cargo where the services supplied included
a maritime element. It is appropriate to take worldwide
liner shipping turnover as the basis for the comparison
of
the undertakings because it
enables the Commission to assess the real resources and
importance of the undertakings concerned.

the relative size of

relating to the

transport

services

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Table 5: Relative size of undertakings in 1994

Table 6: Basic amount of fines (in EUR)

Large carrier

Maersk

Medium to large carriers

NYK

MOL

P & O

K Line

Nedlloyd

Hanjin

Small to medium carriers

Hapag-Lloyd

Small carriers

Evergreen

NOL

DSR-Senator

Yangming

Cho Yang

MISC

OOCL

CGM

Size

100

58

55

52

49

46

41

34

30

28

23

23

17

14

11

6

(184) The facts that in 1997 P & O merged with Nedlloyd
and Hanjin bought DSR-Senator are not relevant as the
infringements occurred before the dates of those events.

lines,

grounds

should be

themselves not

from the
that

treated differently
on the

(185) The Commission has considered whether the 12 FEFC
six
lines
non-Conference
the
Commission is not contesting the FEFC lines’ agreement
from published
amongst
tariffs for charges and surcharges. The Commission
considers that such a distinction should not be made
because it is the extension to the non-Conference lines
of the FEFC lines’ agreement that is at issue in this case,
and in respect of that extension there is no basis to
distinguish between the gravity of the behaviour of the
FEFC lines on the one hand and the non-Conference
lines on the other.

to discount

Category of carrier

Large carrier

Medium to large carriers

Small to medium carriers

Small carriers

1 300 000

1 000 000

650 000

325 000

13.2. Aggravating and mitigating factors

(187) None of

the FETTCSA parties has put

forward any
reason for which it should be considered to have acted
as a follower as opposed to a ringleader. Nor have any
of the FETTCSA parties given any evidence that any of
the other FETTCSA parties acted as a ringleader.
there is no reason which would justify
Accordingly,
distinguishing between the individual FETTCSA parties
as regards their participation in the infringement, except
in the manner described in recital 186.

(188) As indicated in recital 180, the Commission presumes
that the infringement ended upon the parties’ receipt of
the letter dated 28 September 1992 sent by the
Commission’s Directorate-General for Competition. The
about by restrictive
harm to consumers brought
agreements
to such an
is mitigated when parties
agreement terminate their agreement upon receipt of a
warning letter from the Commission. The Commission
the
considers
agreement in this case justifies a reduction of the basic
amount of the fine on each of the parties by 20 %.

the presumed termination of

that

13.3. Commission Notice on the non-imposition or

reduction of fines in cartel cases

(189) The Commission Notice on the non-imposition or
reduction of fines in cartel cases ((cid:145)the Notice(cid:146)) (80) is only
directly applicable in respect of cooperation taking place
after its publication on 18 July 1996. However,
in
respect of cooperation that took place before that date
the Commission applies the Notice by analogy (81).

(190)

In this case the parties cooperated with the Commission
to the extent that they took the initiative in informing
the Commission of the conclusion of the Agreement,
and, in their reply to the Statement of Objections, have
undertaken not
into and implement any
agreement having the same stated objectives as the
formally notifying such an
FETTCSA without
agreement to the Commission, and that they voluntarily

to enter

first

(186) Table 6 sets out

fines for the
carriers falling into each of the four groups, taking into
account the factors mentioned in recitals 179 to 185.

the basic amount of

(80) OJ C 207, 18.7.1996, p. 4.
(81) Decision 1999/210/EC (British Sugar), at recital 212.

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L 268/27

abandoned the FETTCSA after receiving the Statement
of Objections. It should, however, also be noted that the
Commission only became aware of the agreement not
to discount as a result of the parties’ replies to formal
requests for information about their activities under the
FETTCSA.

(191) The parties’ cooperation falls within Section D of the
Notice. The Commission considers
the parties’
cooperation in this case justifies a reduction of the basic
amount of the fine on each of the parties by 10 %.

that

13.4. Lapse of time

The Commission does not believe that the lapse of time
has in this case affected its outcome, nor that the rights
of the defence of the parties have been infringed in any
way. The Commission acknowledges, however, that the
duration of the proceedings in the present case has been
the basic
considerable, and justifies a reduction of
amount of
the parties by EUR
the fine on each of
100 000.

13.5. Specific arguments of DSR-Senator

(196) DSR-Senator has argued that there are several specific
the Commission should take into
circumstances that
account when considering the imposition of any fine in
relation to its participation on the FETTCSA.

(192)

In view of the lapse of time since the Statement of
Objections was sent and the agreement was terminated,
the Commission has considered what effect if any this
should have on the amount of any fine.

(197) First, DSR-Senator argues that account should be taken
of the fact that during the period 1991 to 1994 it did
not make any profits but suffered from substantial
losses.

laid

down

proceedings

exceed the

(193) The Commission does not consider that lapse of time is
a reason not to impose a fine, provided that the lapse of
limitation period for
time does not
by Council
competition
Regulation (EEC) No 2988/74 (82). Article 1 of
the
Regulation provides that
the Commission’s power to
impose fines is subject to a five-year limitation period in
respect of breaches of Article 81(1) of the Treaty. The
period begins
to run on the day on which the
infringement is committed, or, in the case of continuing
or repeated infringements, on the day on which it ends.
It may, however, be interrupted or suspended, pursuant
to Article 2 or 3 respectively of the Regulation. Under
Article 2(3) of the Regulation the limitation period shall
expire at the latest on the day on which a period equal
to twice the limitation period has elapsed.

(194)

In this case, the imposition of a fine is not time-barred.
The limitation period has been interrupted in April
1994 by the Statement of Objections, and in March
1995, June 1998 and October 1999 by written requests
for information. The period elapsed does not exceed
twice the limitation period.

(195) The Commission is also bound by the general principle
following
of
administrative proceedings
to competition
policy must be adopted within a reasonable time (83).

Community

decisions

relating

that

law

of

an

adverse

position

financial

(198) The Court of Justice has stated that to take into account
the
individual
participant to an infringement would be to bestow (cid:145)an
unjustified competitive advantage on undertakings least
well adapted to the conditions of the market(cid:146) (84). The
profits accruing from an infringement are relevant: the
basic amount determined on the basis of the gravity of
the infringement may need to be increased in order to
increase the penalty so it exceeds the amount of gains
improperly made as a result of the infringement. The
fact that a company is loss-making does not mean that
it
the
competition rules. Such a company can benefit from a
reduction of its losses. The fact that DSR-Senator made
no profits in the period in question is therefore not a
reason to reduce the amount of its fine.

from an infringement of

cannot benefit

(199) Secondly, DSR-Senator argues

that

that

It considers

the Commission
should take into account its specific characteristic that it
no longer owns any vessels.
the
Commission has recognised that the question whether a
company has had to sell
its vessels is an important
criterion to evaluate the effective economic capacity of a
liner shipping company and should therefore be taken
into account when considering whether to impose a
fine. It considers itself to be in a similar position to the
Compagnie maritime Za(cid:239)roise (CMZ) on which the
Commission did not
impose a fine in the CEWAL
Decision (85).

(82) OJ L 319, 29.11.1974, p. 1.
(83) Joined Cases T-213/95 and T-18/96 SCK and FNK v Commission
[1997] ECR II-1739, point 56; Joined Cases T-305/94 etc. LVM
and others v Commission, point 121. Concerning the duration of
proceedings before the Court of First Instance, see Baustahlgewebe
in which the Court of
Justice reduced by ECU 50 000 the
applicant’s fine of ECU 3 million as satisfaction for the excessive
duration of proceedings before the Court of First Instance: Case
C-185/95 P Baustahlgewebe v Commission [1998] ECR I-8417,
points 47 and 141.

(200) The Commission does not consider that the position of
DSR-Senator is comparable to that of CMZ in the
CEWAL case. Unlike DSR-Senator, CMZ was effectively
its
moribund,

its sole real activity being the sale of

(84) Joined Cases 96 to 102, 104, 105, 108 and 110/82 IAZ v

Commission [1983] ECR 3369, points 54 and 55.

(85) Commission Decision 93/82/EC (CEWAL) (OJ L 34, 10.2.1993, p.

20), recitals 111 and 112.

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rights to carry goods to and from Zaiire. In contrast,
DSR-Senator operates 31 vessels in 14 liner services (86).

(201) Thirdly, DSR-Senator argues that

its

ability

to pay.

its actual

financial
situation limits
In particular
DSR-Senator argues that the imposition of a fine on it
of EUR 13,75 million in the TACA Decision has caused
serious damage to an already precarious
financial
position. The imposition of a further
fine would
increase the risk of bankruptcy with all the attendant
negative consequences.

(202) The

level of

fine
is not

imposed by this Decision on
DSR-Senator
such as on its own can be
considered
viability of
by
DSR-Senator. Moreover,
DSR-Senator shows that its financial situation improved
in the course of 1999.

to threaten the

information

provided

financial

(203) Fourthly, DSR-Senator considers the Commission should
in this case take into account the fines imposed on
DSR-Senator
in the TACA Decision. The
Commission does not consider it appropriate so to do.
The FETTCSA and TACA cases
concern different
infringements on different markets.

Lines

to its

on the FETTCSA. Cho Yang refers
financial
into economic
difficulties since 1997 when Korea fell
crisis and the won collapsed. It refers to the arguments
it made in its application to the Court of First Instance
for the suspension of the fine imposed on it in the
TACA Decision (87).

It operates on all

(205) The individual financial situation of a participant in an
infringement cannot entail a diminution in the amount
of its fine. In any event, Cho Yang is a significant liner
It owns six container ships and
shipping company.
charters 17 container ships.
three
major east-west trades, as well as on routes within Asia.
Within the framework of
financial
institutions and corporate restructuring in Korea, as
agreed between the Korean Government
and the
International Monetary Fund, Cho Yang and its main
lender entered into an agreement involving a five-year
plan for restructuring Cho Yang and various companies
connected to it by common ownership links. Cho
Yang’s situation is now improving. The level of
fine
imposed by this Decision on Cho Yang is not such as to
threaten the restructuring plan.

the reform of

13.6. Specific arguments of Cho Yang

13.7. Level of fines

(204) Cho Yang has argued that the Commission should take
into account its financial difficulties when considering
the imposition of any fine in relation to its participation

(206) Table 7 below sets out the calculation of the level of
fines taking into account the relative size of each of the
FETTCSA parties.

Table 7: Fines (in EUR)

Relative
size

Basic amount

After deduction for
mitigation

After deduction for
cooperation

After further
deduction for lapse of
time

100

1 300 000

1 040 000

936 000

836 000

58

55

52

49

46

41

34

30

28

23

23

17

14

11

6

1 000 000

1 000 000

1 000 000

1 000 000

1 000 000

1 000 000

650 000

650 000

650 000

650 000

650 000

325 000

325 000

325 000

325 000

800 000

800 000

800 000

800 000

800 000

800 000

520 000

520 000

520 000

520 000

520 000

260 000

260 000

260 000

260 000

720 000

720 000

720 000

720 000

720 000

720 000

468 000

468 000

468 000

468 000

468 000

234 000

234 000

234 000

234 000

620 000

620 000

620 000

620 000

620 000

620 000

368 000

368 000

368 000

368 000

368 000

134 000

134 000

134 000

134 000

M(cid:230)rsk

NYK

MOL

P & O

K Line

Nedlloyd

Hanjin

Hapag-Lloyd

Evergreen

NOL

DSR-Senator

Yangming

Cho Yang

MISC

OOCL

CGM

(86) http://www.dsr-senator.com/cooperat.htm, updated 23.11.1999.

case pending.

(87) Case T-191/98 R II Cho Yang Shipping Co. Ltd v Commission (cid:151)

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(207)

In no case do the fines set out in Table 7 exceed 10 %
the worldwide turnover in 1993 or 1998 of the
of
group of companies of which each undertaking forms
part.

14. CONCLUSIONS

(208) The parties to the FETTCSA infringed Article 81(1) of
the Treaty and Article 2 of Regulation (EEC) No
1017/68. The conditions of Article 81(3) and of Article
5 of Regulation (EEC) No 1017/68 are not satisfied. The
duration of the infringement was from 1 July 1992 to
28 September 1992,

HAS ADOPTED THIS DECISION:

Article 1

to discount

from published tariffs for
The agreement not
charges and surcharges entered into between the undertakings
which were the former members of the Far East Trade Tariff
Charges and Surcharges Agreement (FETTCSA) and to which
this Decision is addressed constituted an infringement of the
provisions of Article 81(1) of the EC Treaty and Article 2 of
Regulation (EEC) No 1017/68.

Article 2

The conditions of Article 81(3) of the EC Treaty and of Article
5 of Regulation (EEC) No 1017/68 are not fulfilled.

Article 3

The undertakings to which this Decision is addressed are
hereby required to refrain in future from any agreement or
concerted practice having the same or a similar object or effect
to the infringement referred to in Article 1.

Article 4

Fines as set out below are hereby imposed on the undertakings
to whom this Decision is addressed.

L 268/29

EUR 134 000
EUR 368 000
EUR 620 000
EUR 836 000
EUR 134 000

EUR 620 000
EUR 368 000
EUR 620 000
EUR 134 000
EUR 1 240 000
EUR 134 000
EUR 368 000
EUR 368 000
EUR 620 000
EUR 368 000

CMA CGM SA
Hapag-Lloyd Container Linie GmbH
Kawasaki Kisen Kaisha Limited
A.P. Młller (cid:151) Maersk Sealand
Malaysia International Shipping Corporation
Berhad
Mitsui OSK Lines Ltd
Neptune Orient Lines Ltd
Nippon Yusen Kaisha
Orient Overseas Container Line Ltd
P & O Nedlloyd Container Line Ltd
Cho Yang Shipping Co. Ltd
DSR-Senator Lines GmbH
Evergreen Marine Corp. (Taiwan) Ltd
Hanjin Shipping Co. Ltd
Yangming Marine Transport Corp.

Article 5

The fines imposed in Article 4 shall be paid, in euro, within
three months of the date of notification of this Decision, into
bank
European
642-0029000-95
Commission, Banco Bilbao Vizcaya Argentaria BBVA, Avenue
des Art/Kunstlaan 43, B-1040 Brussels.

account No

the

of

that period,

After expiry of
interest shall automatically be
payable on the fine at the rate applied by the European Central
Bank to its main refinancing operations on the first working
day of the month in which this Decision is adopted, plus 3,5
percentage points, namely 7,25 %.

Article 6

This Decision is addressed to the undertakings listed in Annex
I hereto.

This Decision shall be enforceable pursuant to Article 256 of
the EC Treaty.

Done at Brussels, 16 May 2000.

For the Commission

Mario MONTI

Member of the Commission

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ANNEX I

CMA CGM SA
22 Quai GalliØni
F-92158 Paris Suresnes Cedex

Hapag-Lloyd Container Linie GmbH
Rosenstra(cid:223)e 17
D-20079 Hamburg

Kawasaki Kisen Kaisha Limited
Hibiya Central Building
2-9 Nishi-Shinbashi 1-chome
Minato-Ku
Tokyo 105-8421
Japan

A.P. Młller Maersk Sealand
Esplanaden 50
DK-1098 Copenhagen K

Malaysia International Shipping Corporation Berhad
Menara Dayabumi
Jalan Sultan Hishamuddin
50778 Kuala Lumpur
PO Box 10371
50712 Kuala Lumpur
Malaysia

Mitsui OSK Lines Ltd
1-1 Toranomon 2-Chome
Minato-Ku
Tokyo 105-8688
Japan

Neptune Orient Lines Ltd
456 Alexandra Road
NOL Building # 06-00
Singapore 119962

Nippon Yusen Kaisha
Yusen Building
3-2 Marunouchi 2-chome
Chiyoda-Ku
Tokyo
Japan

Orient Overseas Container Line Ltd
30th and 31st Floors Harbour Centre
25 Harbour Road
Wanchai
Hong Kong

P & O Nedlloyd Container Line Ltd
Beagle House
Braham Street
London E1 8EP
United Kingdom

Cho Yang Shipping Co. Ltd
51-1 Namchang-Dong, Chung-Ku
Seoul
Korea

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DSR-Senator Lines GmbH
Martinistra(cid:223)e 62-66
D-28195 Bremen

Evergreen Marine Corp. (Taiwan) Ltd
Evergreen Building
166, Section 2, Minsheng East Road
10444 Taipei
Taiwan

Hanjin Shipping Co. Ltd
25-11 Yoido-Dong, Youngdeungpo-Ku
Seoul 150(cid:150)010
Korea

Yangming Marine Transport Corp.
271 Ming De 1st Road
Chidu
Keelung
Taiwan 206

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ANNEX II

Descriptions of the charges and surcharges

1. Bunker adjustment factor (BAF)

The BAF comprises adjustment to reflect the current cost of bunkers (i.e. ship’s fuel) against the base level
incorporated in the freight rate. The methodology is based on voyage returns submitted by the FEFC member lines
which include taking total net sea freight revenue of each line and calculating what proportion the total bunker
costs bear to that sea freight. It also includes a weighting depending on what proportion of bunkers was lifted
where.

2. Currency adjustment factor (CAF)

The CAF is based on a weighting for each currency in the CAF basket based on the currencies in which each line
earns its revenues and incurs its expenses. This involves each FEFC member providing a breakdown of cargo flows
on a country-by-country basis as well details of cost breakdowns (crew, repairs, canal dues, etc.).

3. Terminal handling charges (THC)

Charges paid by shippers for:

(a)

the carrier receiving and storing export containerised cargo or cargo for containerisation at the terminal and
presenting it to the vessel for loading;

(b)

the carrier receiving from the vessel import containerised cargo and arranging its storage at the terminal and
movement from the terminal; and

(c) associated documentation arising from (a) and (b) above.

4.

Less-than-container-load-sevice-charges (LCLSC)

Charges paid by shippers for:

(a)

receipt of export LCL (less-than-container-load) goods at the container freight station (i.e. where they are
consolidated into container loads) by the carrier and for their subsequent storage and handling in accordance
with the carrier’s instructions,

(b)

receipt of import LCL goods from the carrier and for their storage and handling before release to the haulier,
and

(c) associated documentation arising from (a) and (b).

5. Detention charges

Charges imposed for cargo and/or equipment kept beyond the freetime allowed for taking receipt of cargo in the
port/terminal/container yard.

6. Demurrage charges

Charges paid by shippers for detaining carriers’ containers/chassis beyond the prescribed freetime period.

7.

Special equipment premium

Charges paid in respect of specialised equipment.

8. War surcharges

Charges imposed to reflect additional costs resulting from war situations.

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L 268/33

Descriptions of additional charges

1. Optional destinations

Charges paid by shippers where the bill of lading gives the option of delivery at two or more ports or container
terminals, declaration of the required port or terminal having to be made a specified period before the vessel’s due
date of arrival at the first port or terminal in the list.

2. Change of destination (COD)

Charges paid by shippers following a change in the discharge port.

3. Change of delivery status

Change of delivery status from FCL (full-container-load where the haulier is responsible for packing and unpacking
the container) to LCL (less-than-container-load where the carrier is responsible for packing and unpacking the
container) and vice versa.

4.

Packages of value exceeding the carrier’s normal bill of lading liability

Charges paid by shippers where they wish the carrier to be responsible for a cargo value in excess of limitation
prescribed in the carriers’s bill of lading.

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Indicative calculation (cid:151) ocean freight

ANNEX III

1

2

3

4

5

6

7

8

9

Basisc freight

Tariff contract discounts/rebates where applicable

Subtotal

CAF on 3

BAF on 3

Subtotal

FCL/Pallet allowance

NSLC

Transport additionals

Other ocean freight charges

10

Total ocean freight and charges

Source: NT90 3.1.7

a

b

c

d

e

f

c

f

g

h

i

j

k