Opinion of the European Economic and Social Committee on the Proposal for a Council Regulation repealing Regulation (EEC) No 4056/86 laying down detailed rules for the application of Articles 85 and 86 to maritime transport, and amending Regulation (EC) No 1/2003 as regards the extension of its scope to include cabotage and international tramp services COM(2005) 651 final/2 — 2005/0264 (CNS)
Date: 2006-07-05
Institutions: European Economic and Social Committee
Subjects: competition law, competition policy, maritime cabotage, maritime transport

C 309/46

EN

Official Journal of the European Union

16.12.2006

Opinion of the European Economic and Social Committee on the Proposal for a Council Regu-
lation repealing Regulation (EEC) No 4056/86 laying down detailed rules for the application of
Articles 85 and 86 to maritime transport, and amending Regulation (EC) No 1/2003 as regards the
extension of its scope to include cabotage and international tramp services

COM(2005) 651 final/2 — 2005/0264 (CNS)

(2006/C 309/10)

On 10 February 2006, the Council of the European Union decided to consult the European Economic and
Social Committee, under Article 83 of the Treaty establishing the European Community, on the abovemen-
tioned proposal.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee's work on the subject, adopted its opinion on 30 May 2006. The rapporteur was
Dr Bredima-Savopoulou.

At its 428th plenary session, held on 5 and 6 July 2006 (meeting of 5 July 2006), the European Economic
and Social Committee adopted the following opinion by 156 votes to 1 with 7 abstentions.

1. Conclusions and recommendations

Regarding the tramp and cabotage sectors, the EESC
1.1
endorses the proposed extension to these sectors of the proce-
dural competition rules of Regulation 1/2003 (1). It appreciates
the ongoing discussions between the Commission and the ship-
ping industry regarding the application of Articles 81and 82 to
tramp shipping. In the absence of complaints and legal prece-
dents in the tramp sector, more information will be required
about
its operation and agreements. The EESC therefore
welcomes the Commission's initiative to launch a study on the
economic and legal characteristics of the tramp sector. For the
sake of legal certainty, the EESC urges the Commission to
to
(prior
provide
to
Regulation 1/2003)
the
regarding the
compatibility with EU competition law of various forms of
cooperation agreement in the tramp sector.

exclusion
self-assessment of

guidance

lifting

the

1.2 With reference to the liner sector, the EESC notes the
Commission's proposal's to repeal the block exemption of liner
shipping conferences from the EC Treaty competition rules on
the basis that the four cumulative conditions of Article 81(3) of
the EC Treaty are no longer fulfilled. The Commission takes the
view that repeal will result in lower transport costs, whilst
maintaining reliability of services on all trades, and enhance the
competitiveness of European industry. The EESC reserves its
position to see whether the proposed repeal will have sustain-
able effect.

1.3
The EESC recommends the Commission to take the
safety aspect (loss of quality shipping as a result of flagging out
from the EU) into consideration — in addition to the pure
competitive factors — when repealing the block exemption for
liner shipping conferences.

(1) Council Regulation (EC) No 1/2003 of 16 December 2002 on the
implementation of the rules on competition laid down in Articles
81 and 82 of the Treaty (OJ L 1, 4.1.2003, p. 1). EESC Opinion: OJ
C 155/2001; p. 73.

The EESC recommends that the Commission should also
1.4
take the human resources aspect (impact on employment for
European seafarers) into consideration — in addition to purely
competitive factors — when repealing the block exemption for
liner shipping conferences.

1.5
The EESC notes the Commission's intention to issue
appropriate guidelines on competition in the maritime sector
so as to help smooth the transition to a fully competitive
regime. The Commission intends to promulgate the guidelines
by end 2007. Prior to this promulgation, the Commission —
as an interim step in the preparation of the guidelines — will
publish an ‘issues paper’ on liner shipping in September 2006.
The EESC calls upon the Commission to draw up the guidelines
in close contact with the relevant stakeholders and to inform
the relevant EU institutions accordingly.

The Commission proposal

1.6
is the result of a review
process, which started in 2003, involving all relevant EU insti-
tutions and stakeholders. The Commission also contracted
three studies from independent consultants, who looked into
the issues arising from a repeal of the block exemption regime
and whose findings are published on the website of the Direc-
torate General for Competition.

that

the fact

The EESC has also taken note of

the
1.7
Commission's proposal to repeal the block exemption for liner
shipping is based only on Article 83 of the EC Treaty (compe-
tition rules), whereas the legal basis of Regulation 4056/86 was
Article 83 (competition rules)
in combination with Article
(transport policy) of the EC Treaty. The EESC would
80(2)
appreciate some information from the Legal Service of the
European Parliament about whether the transport considera-
tions are ancillary to the competition considerations and
legal
whether the Service maintains its view about the dual
basis as per its previous opinion (2).

(2) A6-0314/2005 of 1/12/2005.

16.12.2006

EN

Official Journal of the European Union

C 309/47

1.8
The EESC, anticipating possible conflicts of law in the
future resulting from legal instruments of other jurisdictions,
urges the Commission to devise a provision in the guidelines
tackling such problems. Such a provision regarding consulta-
tions will minimise frictions and lead to mutually acceptable
solutions internationally.

1.9
The EESC notes that the Commission recognises that
competition law is not applied in the same way in all jurisdic-
tions throughout the world and that divergences exist. The
Commission also recognises the increasing importance of inter-
national cooperation between competition law enforcement
authorities.

The EESC welcomes the fact that the Commission is
1.10
pursuing a dual policy of developing enhanced bilateral coop-
eration with the EU's main trading partners and of examining
ways to expand multilateral cooperation in the field of compe-
tition. The EESC therefore encourages the Commission to accel-
erate efforts to ensure that such cooperation and dialogue will
help to identify potential problems resulting from a repeal of
Regulation 4056/86 in the EU and to solve such problems in a
constructive way, thereby respecting the particularities of each
others' legal system. Consistency in how liner services are dealt
with between different countries is indeed vital to international
trade.

two years, in order to denounce or revise these agreements
with third countries.

1.13
The EESC believes that the Commission should also
take into account the interests of small and medium-sized busi-
nesses in repealing Regulation 4056/86. Small and medium-
sized businesses constitute the backbone of the EU economy
and they play an important role in the context of the revised
Lisbon Strategy. Markets should remain open to the current
and potential competition, including small and medium-sized
shipping operators.

1.14
The EESC maintains that although consolidation may
have positive effects for EU industry (efficiency gains, econo-
mies of scale, cost savings), caution is needed to avoid that
consolidation — which may follow the repeal of Regulation
4056/86 — results in fewer players in the relevant markets,
i.e., less competition.

1.15
Under a new regime, the EESC invites the two inter-
ested parties at European level, — shippers and carriers — to
engage in discussions on issues of mutual interest and signifi-
cance.

1.11
The EESC calls upon the Commission to take into
account the outcome of the dialogue and cooperation between
the Commission and its main trading partners when drafting
the guidelines on competition in the maritime sector.

2. Introduction

2.1 Current trends and legislation

1.12
The EESC acknowledges that the following elements
have been referred to in the Explanatory Memorandum of the
Commission proposal and maintains that they should be taken
into account when drafting the guidelines on competition in
the maritime sector:

— It is recognised that maritime transport services are key to
the development of the EU economy with maritime trans-
port carrying 90 % of its external trade and 43 % of intra-
EU trade.

— The ongoing trend towards containerisation has profoundly
changed liner transportation since the adoption of Regu-
lation 4056/86. It has resulted in an increase in the number
fully cellular container vessels and in an
and size of
emphasis on global route networks. This has contributed to
the popularity of new operational agreements and to a
decline in the significance of liner conferences.

— The conference system — which has operated for 150
years — is still subject to multilateral and bilateral agree-
ments to which the EU Member States and the Community
are contracting parties. The EESC notes that the Commis-
sion recognises that — as a consequence of these agree-
ments, the date of repeal of the following provisions of
Regulation 4056/86 (i.e. Articles 1(3), points (b) and (c),
Articles 3 to 8 and 26) should be postponed for a period of

2.1.1 Maritime transport services are key to the develop-
ment of the EU economy with maritime transport carrying
90 % of the external trade and 43 % of the intra-EU trade. Mari-
time transport has been an international and globalised activity
since antiquity. Basically, it is provided according to two types
of services: liner and tramp which operate like buses and taxis
of the seas respectively. The EU flagged fleet accounts for 25 %
of the world fleet and EU shipowners control over 40 % of the
world fleet. Another 40 % of the world fleet belongs to coun-
tries of the Pacific basin. EU shipping and its customers (char-
terers/shippers) operate in a highly competitive environment in
overseas and European markets.

2.1.2
Regulation 4056/86 lays down detailed rules for the
application of competition rules (Articles 81 and 82 of the
Treaty)
to liner shipping services to and from Community
ports. Tramp vessel services, however, were excluded from the
scope of Regulation 4056/86. Originally the Regulation had
two functions. It contained procedural provisions for the enfor-
cement of the EC competition rules in the maritime transport
sector. This function has become redundant after 1 May 2004,
when liner transport became subject to the general competition
enforcement rules of Regulation 1/2003. Regulation 1/2003,
however, does not apply to international tramp vessel services
and cabotage services. Secondly, Regulation 4056/86 lays
down certain specific substantive competition provisions for
the maritime sector and notably a block exemption for liner
shipping conferences allowing them under certain conditions
to fix prices and regulate capacity.

C 309/48

EN

Official Journal of the European Union

16.12.2006

2.2 The liner sector

2.2.1
The liner shipping market has changed considerably
since Regulation 4056/86 was adopted. The continuing trend
towards containerisation has led to an increase in the number
and size of cellular container vessels and to an emphasis on
global route networks in response to changes in global trade
patterns. This has contributed to the popularity of new opera-
tional arrangements, to a decline in the significance of liner
conferences and to a considerable increase in powerful outsi-
ders. In other parts of the world, as in the US the introduction
of the Ocean Shipping Reform Act (OSRA) 1999 has changed
the rules for conferences serving the US trades allowing confi-
dential service contracts. Today, global
liner carriers operate
mainly in East-West trades as well as in North — South trades,
whilst small and medium-sized carriers mainly operate in the
North — South trades and in European short sea shipping.

2.2.2
The UNCTAD Code of Conduct for Liner Conferences
was originally devised to regulate the liner conference system
in trades between developed and developing countries (3). Thir-
teen EU Member States and Norway have ratified, approved or
acceded to the Code of Conduct and Malta signed but has not
ratified it. It is (4) referred to in several EU agreements with
third countries and in the acquis communautaire (Regulations
954/79, 4055/86, 4056/86, 4058/86). Despite its virtual
redundancy in the deep-sea liner trades, legally speaking, the
UNCTAD Code still exists.

2.2.3
Transport users (shippers and freight forwarders) have
systematically questioned the conference system which they
consider does not deliver adequate, efficient and reliable
services suited to their needs. In particular, the ESC (5) believes
removal of
the block exemption of conferences will allow
improved customer-provider partnerships focusing on logistics
solutions that help EU businesses to compete internationally.
Likewise, consumers would benefit from slightly reduced prices
when rates charged on in-bound products to the EU declined.
Shipowners, on the contrary, have been of the opinion that
liner conferences have contributed to service stability and that
the conference regime has enabled them — both globally and
regionally — to cope with imbalances (whether seasonal or
geographical or due to climate conditions) on most trades.
Meanwhile, global carriers (members of ELAA (6)) and the ESC
have entered into a dialogue with the Commission assisting it
in developing an alternative system that is compliant with EC
competition rules.

(3) For more information about the UNCTAD Liner Code and Regu-

lation 954/79, cf. EESC opinion OJ C 157, 28.6.2005, p. 130.

(4) See the document on the Status of multilateral treaties published by

the UNCTAD Secretariat
http://www.unctad.org/en/docs/tbinf192.en.pdf (page 4)

(5) ESC= European Shippers' Council.
(6) ELAA= European Liner Affairs Association.

2.2.4
In 2003, the Commission launched a review of Regu-
lation 4056/86 with the aim of determining whether reliable
scheduled maritime services could be achieved by less restric-
tive means than horizontal price fixing and capacity regulation.
To that end, the Commission issued a Consultation Paper in
March 2003 and organised a Public Hearing with the relevant
stakeholders in December 2003. Furthermore, the Commission
issued a discussion paper in June 2004 and a White Paper in
October 2004 followed by extensive consultations with inter-
ested stakeholders. The European Parliament (7)
and the
EESC (8) delivered their opinions on the White Paper on 1
December 2005 and 16 December 2004 respectively and they
both concurred that review rather than repeal was the prefer-
able course of action.
In December 2005, the Commission
eventually issued a proposal for a Regulation repealing Regu-
lation 4056/86.

2.3 The tramp sector

2.3.1
Although nearly 80 % of the entire maritime transport
of dry and liquid bulk commodities worldwide operates on a
tramp basis, this vast sector is a terra incognita to most. The
basic characteristics of tramp shipping are: a globally competi-
tive market, a close to perfect competition model, volatile and
unpredictable demand, many small entrepreneurial companies,
global trade patterns, ease of entry and exit, extreme cost effec-
tiveness, and responsiveness to development of markets and
shippers' needs. The tramp services market is highly fragmented
and overall it has worked to the satisfaction of charterers and
shippers without any major problems with competition rules,
neither internationally nor within the EU. The absence of
complaints regarding this sector is a further proof of its highly
In view of
competitive and satisfactory characteristics.
the
above, Regulation 4056/86 provides
tramp shipping
that
services are activities to which it does not apply. Articles 81 —
82 of the EC Treaty apply directly to this sector. Moreover,
international tramp vessel services (and cabotage services) do
not fall within the scope of Regulation 1/2003 (procedural
competition rules).

2.4 The Commission's proposal

In view of the changes to the structure of the market
2.4.1
and industry since 1986,
the European Commission has
concluded that the four cumulative conditions, as laid down in
Art. 81(3) of the EC Treaty, for granting a block exemption to
liner conferences are no longer fulfilled. For this reason, the
Commission has proposed to repeal Regulation 4056/86 in its
entirety and notably the liner conference block exemption
(Articles 3 to 8, 13 and 26). Certain provisions considered
redundant are also repealed in line with the EC's overall policy
to reduce Community legislation (Articles 2 and 9). The
Commission takes the view that such a repeal will result in
lower transport costs, whilst maintaining reliability of services
on all trades and enhancing the competitiveness of European
industry.

(7) A6-0314/2005 of 1.12.2005.
(8) EESC Opinion: OJ C 157, of 28.6.2005, p. 130.

16.12.2006

EN

Official Journal of the European Union

C 309/49

Prior

to repealing the block exemption for

2.4.2
liner
conferences, the Commission intends to issue guidelines on
competition in the maritime sector so as to help smooth the
transition to a fully competitive regime. The Commission
intends to promulgate these guidelines by end 2007. Prior to
this promulgation, the Commission — as an interim step in the
preparation of the guidelines — will publish an ‘issues paper’
on liner shipping in September 2006.

3.2.3
In the light of the above, the EESC agrees with the
Commission's approach on the future treatment of the tramp
and cabotage sectors.

3.3 The liner sector

2.4.3
The Commission proposal on repealing Regulation
4056/86 also contains a proposal to amend Regulation 1/2003
with a view to bringing international tramp vessel services and
cabotage services under the scope of this Regulation.

3. General comments

sector,

the EESC notes

Regarding the liner

3.3.1
the
Commission proposal to repeal the block exemption of liner
shipping conferences from the EC Treaty competition rules on
the basis that the four cumulative conditions of Article 81(3) of
the EC Treaty are no longer fulfilled. The Commission takes the
view that such a repeal will result in lower transport costs,
whilst maintaining reliability of services on all
trades, and
enhance the competitiveness of European industry. The EESC
reserves its position to see whether the proposed repeal will
have sustainable effect.

the current

The EESC believes that

3.1
issue merits a
balanced approach taking into account the following factors:
the benefits of competition to the competitiveness of EU
industry, the changing patterns of world trade and its effect on
the provision of
transport
implications for the EU's major trading partners as well as for
developing countries, the views of global shippers and carriers,
and the views of small and medium-sized carriers and shippers.

transport services,

international

3.2 The tramp and cabotage sectors

3.2.1
Tramp shipping operates in a global market under
conditions of perfect competition. This unique characteristic of
the tramp sector, recognised by practitioners and academics,
was also acknowledged by the EU in Regulation 4056/86. The
EESC understands the need to bring this sector under the
procedural competition rules of Regulation 1/2003 and, there-
fore, endorses the proposed approach. The EESC welcomes the
Commission's initiative to launch a study on the economic and
legal characteristics of the tramp sector. For the sake of legal
certainty, the EESC urges the Commission to provide guidance
(prior to lifting the exclusion to Regulation 1/2003) regarding
the self-assessment of the compatibility with EU competition
law of various forms of cooperation agreements in the tramp
sector. The absence of complaints and legal precedents in the
tramp sector is a proof of its operation under conditions of
perfect competition. In order to provide legal yardsticks for its
self-assessment under EC competition rules, more information
will be required about its operation and agreements. The EESC
also appreciates the ongoing discussions between the Commis-
sion and the shipping industry regarding the application of
Articles 81-82 to tramp shipping.

3.2.2
Concerning maritime cabotage the EESC agrees with
the proposed treatment, i.e. cabotage to become subject to the
procedural rules of Regulation 1/2003. The vast majority of
agreements in this sector would not affect intra — EU trades
nor create any restrictions on competition.

3.3.2
The EESC notes the Commission's intention to issue
appropriate guidelines on competition in the maritime sector
so as to help smooth the transition to a fully competitive
regime. The EESC calls upon the Commission to draw up the
guidelines in close contact with the relevant stakeholders and
to inform the relevant EU institutions accordingly.

The Commission's proposal is the result of a review
3.3.3
process, which started in 2003, involving all relevant EU Insti-
tutions and stakeholders. The Commission also contracted
three studies from independent consultants, who looked into
the issues arising from a repeal of the block exemption regime
and whose findings are published on the DG COMP website.

3.3.4
The EESC has also taken note of the fact that the
Commission proposal to repeal the block exemption for liner
shipping is based only on Article 83 of the EC Treaty (compe-
tition rules), whereas the legal basis of Regulation 4056/86 was
Article 83 (competition rules)
in combination with Article
80(2) (transport policy) of the EC Treaty.

3.3.5
The EESC notes that the Commission recognises that
competition law is not applied in the same way in all jurisdic-
tions throughout the world and that divergences exist. The
Commission also recognises the increasing importance of inter-
national cooperation between competition law enforcement
authorities.

3.3.6
The EESC welcomes the fact that the Commission is
pursuing a dual policy of developing enhanced bilateral coop-
eration with the EU's main trading partners and of examining
ways to expand multilateral cooperation in the field of compe-
tition. The EESC therefore encourages the Commission to accel-
erate efforts to ensure that such cooperation/dialogue will help
to identify potential problems resulting from a repeal of Regu-
lation 4056/86 in the EU and to solve such problems in a
constructive way, thereby respecting the particularities of each
others' system/jurisdiction. Consistency in how liner services
are dealt with between different countries is indeed vital to
international trade.

C 309/50

EN

Official Journal of the European Union

16.12.2006

3.3.7
The EESC calls upon the Commission to take into
account the outcome of the dialogue/cooperation between the
Commission and its main trading partners when drafting the
guidelines on competition in the maritime sector.

3.3.8
The EESC acknowledges that the following elements
have been referred to in the Explanatory Memorandum of the
Commission proposal and maintains that they should be taken
into account when drafting the guidelines on competition in
the maritime sector:

— It is recognised that maritime transport services are key to
the development of the EU economy with maritime trans-
port carrying 90 % of its external trade and 43 % of intra-
EU trade.

— The

trend

towards

continuing

containerisation

has
profoundly changed liner transportation since Regulation
4056/86 was adopted. It has resulted in an increase in the
number and size of fully-cellular container vessels and in an
emphasis on global route networks. This has contributed to
the popularity of new operational agreements and to a
decline in the significance of liner conferences.

— The conference system — which has operated for 150
years — is still subject to multilateral and bilateral agree-
ments to which EU Member States and/or the Community
are contracting parties. The EESC notes that the Commis-
sion recognises that — as a consequence of these agree-
ments — the date of repeal of the following provisions of
Regulation 4056/86 (i.e. Articles 1(3), points (b) and (c),
Articles 3 to 8 and 26) should be postponed for a period of
two years, in order to denounce or revise these agreements
with third countries.

3.3.9
The EESC recommends that the Commission should
also take the human element into consideration (impact on
employment for European seafarers) — in addition to purely
competitive factors — when repealing the block exemption for
liner shipping conferences. The EESC also requests from the
Commission to evaluate the scope of this impact, especially
through consulting the Sectoral Social Dialogue Committee on
Maritime Transport.

The EESC recommends the Commission to take the
3.3.10
safety aspect (loss of quality shipping as a result of flagging out
from the EU)
into consideration — in addition to purely
competitive factors — when repealing the block exemption for
liner shipping conferences.

3.3.11
The EESC believes that the Commission should also
take into account the interests of small and medium-sized busi-
nesses in repealing Regulation 4056/86. Small and medium-

Brussels, 5 July 2006

sized businesses ‘constitute the backbone of the EU economy’
and they play an important role in the context of the revised
Lisbon Strategy. Markets should remain open to the actual and
including for small and medium-sized
potential competition,
shipping operators and shippers.

3.3.12
The EESC maintains that although consolidation may
have positive effects for EU industry (efficiency gains, econo-
mies of scale, cost savings), caution is needed to avoid that
consolidation — which may follow the repeal of Regulation
4056/86 — results in fewer players in the relevant markets,
i.e., less competition.

Under a new regime, the EESC invites the two inter-
3.3.13
ested parties at European level — shippers and carriers — to
engage in discussions on issues of mutual interest and signifi-
cance.

4. Specific comments

4.1 Legal basis

The EESC notes that Regulation 4056/86 had a dual
4.1.1
legal basis (Articles 80(2) and Articles 81-82 and 83 referring
to transport policies and competition respectively), whilst the
proposal maintains only one (Arts. 81-82). The EESC also notes
that the single legal basis is upheld by the Legal Service of the
Council. It would appreciate knowing from the Legal Service of
the European Parliament whether the transport considerations
are ancillary to the competition considerations and whether the
Service maintains its view about the dual legal basis as per its
previous opinion (December 2005).

4.2 Conflict of Laws

4.2.1
The Commission proposes to abolish Article 9 of
Regulation 4056/86 on the basis that it does not believe that a
repeal of the liner conference block exemption would create
the risk of possible conflict of international laws. The Commis-
sion's reasoning is that such a conflict of law would only arise
if one jurisdiction prohibits something which another jurisdic-
tion requires. The Commission is not aware of any jurisdiction
that imposes such an obligation on liner shipping operators.

4.2.2
The EESC, anticipating possible conflicts of law in the
future resulting from legal instruments of other jurisdictions,
urges the Commission to devise a provision in the guidelines
tackling such problems. Such a provision regarding consulta-
tions will minimise frictions and lead to mutually acceptable
solutions internationally.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND