WRITTEN QUESTION E-3616/02 by Erik Meijer (GUE/NGL) to the Commission. Regular and safe maritime shipping services on fixed routes jeopardised by ban on price agreements and authorisation to award secret discounts.
Date: 2002-12-16
Institutions: European Parliament, Provisional data
Subjects: common transport policy, competition law, crew, environmental protection, flag of convenience, maritime conference, maritime safety, organisation of transport, reduced price, working conditions

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on 30 January 2003 it has decided to open the formal investigation procedure provided for by Article 88
(2) of the EC Treaty. This procedure will allow an in-depth investigation of the State intervention, and all
interested parties to present their observations.

Given the economic importance of the case the Commission has treated it as a priority and it has been
able to clarify its preliminary position in the a few weeks. The answer to the issues raised by the
Honourable Member must be considered against the background of the decision to open the formal
investigation procedure adopted by the Commission. It seems useful to make some general remarks as to
the issues raised.

1.
As to the question concerning the possibility for France Telecom to obtain financial resources at
conditions that are more favourable than those applicable to other operators thanks to the intervention of
ERAP, it should be noted that when a company is able to obtain financial resources at conditions more
favourable than normal market conditions thanks to a State intervention implying the actual or potential
mobilisation of State resources (regardless of whether this is a direct intervention or an indirect one
through another State body), the State intervention constitutes, in principle, a State aid that must be
notified, provided the other requirements of Article 87(1) of the EC Treaty are fulfilled.

As to the general question concerning State guarantees, it must be underlined that a State guarantee
2.
may constitute a State aid only if
the guarantee is not remunerated by an appropriate premium.
Commission notice on the application of Articles 87 and 88 of the EC Treaty to State aid in the form of
guarantees (1) provides for more details as to the Commission’s approach in this matter.

3.
On the last issue raised by the Honourable Member, regardless of whether the telecom sector is
undergoing a sectorial crisis, the Commission believes that State aid rules must be respected in any
particular economic conjuncture. In this connection, it should be reminded that State interventions must
be assessed on the basis of their effects. Therefore, when a State measure qualifies as State aid, the
Commission has to take the appropriate steps to ensure that the aid does not distort competition to an
extent contrary to the common interest.

(1) OJ C 71, 11.3.2000.

(2003/C 280 E/021)

WRITTEN QUESTION E-3616/02

by Erik Meijer (GUE/NGL) to the Commission

(16 December 2002)

Subject: Regular and safe maritime shipping services on fixed routes jeopardised by ban on price

agreements and authorisation to award secret discounts

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

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

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

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

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

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

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

Answer given by Mr Monti on behalf of the Commission

(10 February 2003)

to amend or repeal

The Commission has not submitted any proposal

1.
the Community block
exemption for price-fixing by liner conferences. It is, however, undertaking a review of Council Regulation
(EEC) No 4056/86 of 22 December 1986 laying down detailed rules for the application of Articles 85 and
86 of the Treaty to maritime transport (1), which contains the block exemption. This is entirely consistent
with Commission practice with regard to other block exemptions (motor vehicles, insurance, etc.). It should
be noted that most block exemption regulations provide for a review at regular intervals (usually five
in order to verify that the conditions for granting the block exemption are still fulfilled. The
years)
Commission believes that this is a minimum requirement in order to comply both with the principle of
sound administration and with the competition provisions of the EC Treaty. Indeed, the fact that no
comprehensive review of the liner conference block exemption has been undertaken in the more than
fifteen years since it entered into force,
in circumstances where market conditions have changed
considerably, could provide grounds for concern.

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

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

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

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

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

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

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

(1) OJ L 378, 31.12.1986.
(2) OJ L 100, 20.4.2000.

(2003/C 280 E/022)

WRITTEN QUESTION E-3754/02

by Jan Andersson (PSE) to the Commission

(20 December 2002)

Subject: Application of the Schengen Agreement at Frankfurt airport

A Swedish citizen who flew into Frankfurt airport (in November 2002) from a non-European country has
stated that, on arrival, German police singled out all those travelling on German passports and ushered
them into a separate queue to pass through passport control. German passport-holders were therefore able
to get through passport control considerably faster than anyone else holding a passport issued by another
Schengen country, as the latter were instructed to join the normal queue, conventionally divided into
queues for EU citizens and non-EU citizens, which were, of course, much longer.

This procedure, as described, raises questions as to how the principles of the Schengen Convention are
applied at Frankfurt airport. Since the entry into force of the Treaty of Amsterdam, the Council
is
responsible for ensuring that checks on individuals at the external borders of the Schengen area are carried
out in a uniform manner. However, the description of the procedure at Frankfurt airport indicates that this
is not the case and that it constitutes a breach of the principles laid down in the Schengen agreement.

Does the ‘common manual for the external frontiers’ allow the type of distinction between different
Schengen citizens as described above?

If not, what measures can the Commission take to deal with this discrimination?

In the light of this situation, should the revision of the manual, which is reportedly in progress, be stepped
up?

Answer given by Mr Vitorino on behalf of the Commission

(10 February 2003)

In response to the matters raised by the Honourable Member, the Commission would recall the following
principles of Community law:

(cid:1) Under Council Decision 1999/436/EC of 20 May 1999 (1), the main provisions of the Schengen acquis
relating to the monitoring and surveillance of persons crossing the external borders have been given a
new legal basis in Article 62 of the EC Treaty, in particular the decision of the Schengen Executive
Committee introducing and applying the Schengen arrangements in airports and aerodromes (2).
Henceforth the provisions which constitute the Schengen acquis have the status of Community law
and thus the Commission can exercise its role of guardian of the Treaties to ensure compliance with
it.

(cid:1) With regard to substance, the Schengen acquis provides that checks on persons crossing external
borders should be kept to a minimum for those covered by Community law, with identity papers and
travel documents being checked. More thorough checks should be carried out on nationals of third
countries not covered by Community law, and checks should not be confined to a mere examination
of their identity papers or travel documents.