Council Regulation (EC) No 1419/2006 of 25 September 2006 repealing Regulation (EEC) No 4056/86 laying down detailed rules for the application of Articles 85 and 86 of the Treaty to maritime transport, and amending Regulation (EC) No 1/2003 as regards the extension of its scope to include cabotage and international tramp services   (Text with EEA relevance)
Date: 2006-09-25
Institutions: Council of the European Union
Subjects: chartering, competition law, economic concentration, maritime cabotage, maritime conference, maritime transport, merger control, transport regulations

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 1419/2006

of 25 September 2006

repealing Regulation (EEC) No 4056/86 laying down detailed rules for the application of Articles 85
and 86 of the Treaty to maritime transport, and amending Regulation (EC) No 1/2003 as regards the
extension of its scope to include cabotage and international tramp services

(Text with EEA relevance)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community, and in particular Article 83 thereof,

establishing the European

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament (1),

Having regard to the opinion of the European Economic and
Social Committee (2),

After consulting the Committee of the Regions,

Whereas:

(2)

(3)

(1)

Application of the rules on competition in the maritime
transport sector has been subject to the provisions of
Regulation (EEC) No 4056/86 (3) since 1987. Regulation
(EEC) No 4056/86 originally had two functions. Firstly, it
contained procedural provisions for the enforcement of
Community competition rules in the maritime transport
sector. Secondly, it laid down certain specific substantive
the maritime sector and
competition provisions
shipping
liner
a
notably

for
exemption

block

for

(1) Opinion of 4 July 2006 (not yet published in the Official Journal).
(2) Opinion delivered on 5 July 2006 (not yet published in the Official

Journal).

conferences, allowing them to fix prices and regulate
the exclusion of
capacity under certain conditions,
purely technical agreements from the application of
Article 81(1) of the Treaty and a procedure for dealing
with conflicts of international
law. It did not apply to
maritime transport services between ports in one or to
the same Member State (cabotage) and international
tramp vessel services.

Council Regulation (EC) No 1/2003 of 16 December
2002 on the implementation of the rules on competition
the Treaty (4)
laid down in Articles 81 and 82 of
amended Regulation (EEC) No 4056/86 to bring
maritime transport under
the common competition
enforcement rules applicable to all sectors with effect
from 1 May 2004, with the exception of cabotage and
international tramp vessel services. However, the specific
substantive
to the
maritime sector continue to fall within the scope of
Regulation (EEC) No 4056/86.

competition provisions

relating

justification for

The liner shipping conference block exemption provided
for in Regulation (EEC) No 4056/86 exempts from the
prohibition of Article 81(1) of the Treaty agreements,
decisions and concerted practices of all or part of the
members of one or more liner conferences which fulfil
certain conditions. The
the block
exemption in essence assumes that conferences bring
stability,
services which
cannot be achieved by less restrictive means. However,
a thorough review of the industry carried out by the
Commission has demonstrated that
liner shipping is
not unique as its cost structure does not differ substan-
tially from that of other industries. There is therefore no
evidence that the industry needs to be protected from
competition.

ensuring exporters

reliable

(3) OJ L 378, 31.12.1986, p. 4. Regulation as last amended by the

(4) OJ L 1, 4.1.2003, p. 1. Regulation as amended by Regulation (EC)

2003 Act of Accession.

No 411/2004 (OJ L 68, 6.3.2004, p. 1).

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(4)

(5)

(6)

to more stable freight

The first condition for exemption under Article 81(3)
requires that
the restrictive agreement contributes to
improving the production or distribution of goods or
economic progress. As
to promoting technical or
liner
regards the efficiencies generated by conferences,
conferences are no longer able to enforce the conference
tariff although they still manage to set charges and
surcharges which are a part of the price of transport.
There is also no evidence that the conference system
rates or more reliable
leads
shipping services than would be the case in a fully
competitive market. Conference members increasingly
service agreements
offer
entered into with individual exporters.
In addition,
conferences do not manage the carrying capacity that
is available as this is an individual decision taken by
each carrier. Under current market conditions price
stability and the reliability of services are brought about
by individual service agreements. The alleged causal link
between the restrictions (price fixing and supply regu-
lation) and the claimed efficiencies (reliable services)
therefore
first
too tenuous
condition of Article 81(3).

services via individual

to meet

appears

their

the

The second condition for exemption under Article 81(3)
is that consumers must be compensated for the negative
effects resulting from the restriction of competition. In
the case of hard core restrictions, such as horizontal price
fixing which occur when the conference tariff is set and
charges and surcharges are jointly fixed,
the negative
effects are very serious. However no clearly positive
effects have been identified. Transport users consider
that conferences operate for the benefit of
the least
efficient members
abolishment.
and call
Conferences no longer fulfil
the second condition of
Article 81(3).

their

for

The third condition for exemption under Article 81(3) is
that the conduct must not impose on the undertakings
concerned restrictions which are not indispensable to the
attainment of
its objectives. Consortia are cooperative
agreements between liner shipping lines that do not
involve price fixing and are therefore less restrictive
them to
than conferences. Transport users consider
scheduled
provide
adequate,
maritime services.
individual
service agreements has increased significantly in recent
years. By definition, such individual service agreements
do not
restrict competition and provide benefits to
exporters as they make it possible to tailor special
services. Furthermore, because the price is established in
advance and does not
fluctuate for a predetermined
period (usually up to one year), service contracts can

efficient
and
reliable
In addition the use of

of

the

that

restrictions

contribute to price stability. It has therefore not been
established
competition
permitted under Regulation (EEC) No 4056/86 (price
fixing and capacity regulation) are indispensable for the
provision of reliable shipping services to transport users
as these can be achieved by less restrictive means. The
third condition under Article 81(3)
is therefore not
satisfied.

(7)

(8)

(9)

lines. Whilst

Finally, the fourth condition under Article 81(3) requires
that the conference should remain subject to effective
competitive constraints. In current market circumstances
conferences are present in nearly all major trade lanes
and they compete with carriers grouped in consortia and
there may be price
with independent
competition on the ocean freight
rate due to the
weakening of the conference system there is hardly any
price competition with respect
to the surcharges and
ancillary charges. These are set by the conference and
the same level of charges is often applied by non-
conference carriers.
In addition, carriers participate in
conferences and consortia on the same trade, exchanging
commercially sensitive information and cumulating the
benefits of the conference (price fixing and capacity regu-
lation) and of the consortia (operational cooperation for
the provision of a joint service) block exemptions. Given
the increasing number of links between carriers in the
same trade, determining the extent to which conferences
are subject to effective internal and external competition
is a very complex exercise and one that can only be done
on a case by case basis.

Liner shipping conferences therefore no longer fulfil the
four cumulative conditions for exemption under Article
81(3) of the Treaty and the block exemption in respect
of such conferences should therefore be abolished.

The exclusion from the prohibition of Article 81(1) of
the Treaty of purely technical agreements and the
procedure for dealing with conflicts of law which may
should
arise
therefore also be deleted.

also redundant. Those provisions

are

(10)

In the light of the above, Regulation (EEC) No 4056/86
should be repealed in its entirety.

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(11)

(12)

(13)

Liner conferences are tolerated in several jurisdictions. In
this, as in other sectors, competition law is not applied in
the same way worldwide. In light of the global nature of
the liner shipping industry, the Commission should take
the appropriate steps to advance the removal of the price
fixing
exist
liner
elsewhere whilst maintaining the exemption for opera-
tional cooperation between shipping lines grouped in
consortia and alliances, in line with the recommendations
of the OECD Secretariat in 2002.

exemption for

conferences

that

Cabotage and international tramp vessel services have
been excluded from the rules implementing Articles 81
and 82 of the Treaty originally laid down in Regulation
(EEC) No 4056/86 and subsequently in Regulation (EC)
No 1/2003. They are currently the only remaining
sectors to be excluded from the Community competition
implementing rules. The lack of effective enforcement
powers for these sectors is an anomaly from a regulatory
point of view.

and

supply

demand

The exclusion of tramp vessel services from Regulation
(EC) No 1/2003 was based on the fact that rates for these
services are freely negotiated on a case by case basis in
accordance with
conditions.
However, such market conditions are present in other
sectors and the substantive provisions of Articles 81
and 82 already apply to these services. No convincing
reason has been brought forward to maintain the current
exclusion of these services from the rules implementing
Articles 81 and 82 of the Treaty. Similarly, although
cabotage
services often have no effect on intra
Community trade, this does not mean that they should
be excluded from the scope of Regulation (EC) No
1/2003 from the outset.

(15)

(16)

rules to all sectors, the scope of that Regulation should
be amended so as to include cabotage and tramp vessel
services.

Regulation (EC) No 1/2003 should therefore be amended
accordingly.

Since Member States may need to adjust their interna-
tional commitments in the light of the abolition of the
conference system, the provisions of Regulation (EEC) No
4056/86 relating
block
the
exemption should continue to apply to conferences
satisfying the requirements of Regulation (EEC) No
4056/86 on the date of entry into force of this Regu-
lation for a transitional period,

conference

liner

to

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EEC) No 4056/86 shall be repealed.

However, Article 1(3)(b) and (c), Articles 3 to 7, Article 8(2) and
Article 26 of Regulation (EEC) No 4056/86 shall continue to
apply in respect of
liner shipping conferences satisfying the
requirements of Regulation (EEC) No 4056/86 on 18 October
2006, for a transitional period of two years from that date.

Article 2

Article 32 of Regulation (EC) No 1/2003 shall be deleted.

Article 3

(14) As the mechanisms enshrined in Regulation (EC) No
1/2003 are appropriate for applying the competition

This Regulation shall enter into force on the 20th day following
its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 25 September 2006.

For the Council
The President

M. PEKKARINEN