Proposal for a European Parliament AND Council Regulation repealing Council Regulation (EEC) No 954/79 concerning the ratification by Member States of, or their accession to, the United Nations Convention on a Code of Conduct for Liner Conferences
Date: 2007-01-30
Institutions: European Commission
Subjects: accession to an agreement, code of conduct, competition law, infringement of EU law, international convention, maritime conference, maritime transport

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.1.2007 
COM(2006) 869 final 

2006/0308 (COD) 

Proposal for a 

EUROPEAN PARLIAMENT AND COUNCIL REGULATION 

repealing Council Regulation (EEC) No 954/79 concerning the ratification by Member 
States of, or their accession to, the United Nations Convention on a Code of Conduct for 
Liner Conferences 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

The  proposal  aims  to  repeal  Council  Regulation  (EEC)  No  954/79  of  15  May  1979 
concerning  the  ratification  by  Member  States  of,  or  their  accession  to,  the  United  Nations 
Convention on a Code of Conduct for Liner Conferences. The present proposal has been made 
necessary by the adoption of 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 to maritime transport, and amending Regulation (EC) No 1/2003 as regards 
the extension of its scope to include cabotage and international tramp services. 

•  General context 

Regulation (EEC) No 954/79 deals with the accession to or ratification by Member States of 
the United Nations Convention on a Code of Conduct for Liner Conferences.  

The  Convention  on  a  Code  of  Conduct  for  Liner  Conferences  (Geneva,  6  April  1974)  was 
drafted  under  the  auspices  of  the  United  Nations  Conference  on  Trade  and  Development 
(UNCTAD)  with  the  aim  of  setting  out  a  harmonised  international  framework  for  the 
operation  of  shipping  conferences.  The  objective  of  the  UNCTAD  Convention  was  to 
promote  a  fair  balance  in  the  access  to  freight  in  liner  shipping  between  operators  from 
developed  countries  and  those  from  developing  ones.  For  that  purpose  the  Code  establishes 
the so called "40/40/20 rule", according to which shipments carried between two State Parties 
have  to  be  shared  in  the  following  way:  40%  for  ship  owners  established  in  the  country  of 
origin,  40%  for  ship  owners  established  in  the  country  of  destination,  and  20%  for  ship 
owners from other countries (which are also party to the Code). The Convention also provides 
for  rules  and  procedures  aiming  at  avoiding  abuses  by  conferences  and  at  favouring  a 
dialogue between shippers and carriers. Even though the main objective of the Code was to 
protect the interest of developing countries, such countries have been disappointed about the 
way the Convention has been implemented from the time of its entry into force on 6 October 
1983.  

Thirteen  Member  States  of  the  Community  are  party  to  the  Code.  Under  Article  48  of  the 
Code, States are entitled to become contracting parties by means of accession or signature, if 
necessary  followed  by  ratification,  acceptance,  or  approval,  according  to  their  national  law. 
On that basis, Belgium and Germany have ratified the Convention; Denmark, Finland, Italy, 
the  Netherlands,  Portugal,  Spain,  Sweden,  and  the  United  Kingdom  have  acceded  to  it;  the 
Czech  Republic,  France,  and  Slovakia  have  approved  it.  Norway  has  also  acceded  to  the 
Code.  

Since  the  Code  of  Conduct  provides  for  the  allotment  of  freight  on  the  basis  of  national 
shares,  Community  law  had  to  set  up  arrangements  aimed  at  making  such  a  mechanism 
compatible  with  the  principles  of  the  Treaty.  Hence,  Council  Regulation  (EEC)  No  954/79 
was  adopted,  requiring  Member  States  to  enter  a  reservation  while  ratifying  (approving  or 
acceding  to)  the  Convention,  according  to  which  they  had  to  open  their  national  shares 
granted under the Code to all ship owners established in the Community. The regulation also 

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contains detailed provisions relating to the implementation of the Convention, but it does not 
impose on Member States its ratification.  

On  25  September  2006  the  Council  adopted  Regulation  (EC)  No 1419/2006  repealing 
Regulation (EEC) No 4056/86. Regulation (EEC) No 4056/86 provided for a block exemption 
of liner conferences from the EC Treaty’s ban on restrictive business practices (Article 81). 
Prior to the entry into force of this repeal, given that competition rules had never applied fully 
to  the  liner  sector,  the  Commission  will  issue  appropriate  guidelines  on  competition  in  the 
maritime  sector  so  as  to  help  smooth  the  transition  to  a  fully  competitive  regime.  The 
guidelines,  which  should  be  promulgated  by  end  2007,  would  treat  issues  such  as,  an 
independent  data  warehouse,  the  creation  of  a  trade  association  and  of  trade  fora,  and  the 
publication of a price index. The purpose of these guidelines is to explain, inter alia, how the 
competition rules apply to the liner sector in general, including timely and regular exchange 
and  publication  of  information  on  capacity  and  utilisation.  As  an  interim  step  in  the 
preparation  of  guidelines,  the  Commission’s  services  published  an  “issues  paper”  on  liner 
shipping in September 2006. 

Under Article 1, second paragraph, of Council Regulation (EC) No 1419/2006, 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  -  date  of  entry  into  force  of  Council 
Regulation (EC) No 1419/2006 - for a transitional period of two years.  

Therefore, on 18 October 2008 – ie, after the transitional period has expired - , Article 81(1) 
of the Treaty will apply to liner shipping and shipping conferences will become unlawful on 
trades to/from ports of the Community. Member States which are party to the Code will no 
longer be able to fulfil their obligations thereof, namely the one to ensure that their national 
shipping  lines  have  the  right  to  be  full  members  of  conferences  serving  their  foreign  trade 
(Article 1(1) of the Code). Those Member States will have to withdraw from the Convention. 
It goes without saying that Member States which are not party to the Code will no longer be 
able to ratify it or to accede to it.  

As  a  consequence,  Regulation  (EEC)  No  954/79  will  become  inapplicable  and  should  be 
repealed at the time of the repeal of the exemption from the prohibition in Article 81(1) of the 
Treaty in respect of shipping conferences.  

•  Existing provisions in the area of the proposal 

Council Regulation (EEC) No 954/79 of 15 May 1979 concerning the ratification by Member 
States  of,  or  their  accession  to,  the  United  Nations  Convention  on  a  Code  of  Conduct  for 
Liner Conferences. 

•  Consistency with the other policies and objectives of the Union 

The  proposal  is  in  line  with  competition  policy,  since  it  aims  at  aligning  the  acquis  in  the 
maritime  sector  with  the  proposed  reform  of  liner  shipping.  It  is  also  consistent  with  the 
current  policy  of  simplification,  since  its  objective  is  removing  from  the  Community  set  of 
rules a legal instrument which will become inapplicable. 

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2. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

The  present  proposal  is  ancillary  to  Council  Regulation  (EC)  No 1419/2006  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.  

•  Collection and use of expertise 

There was no need for external expertise. 

•  Impact assessment 

Since the proposal regards the repeal of an existing regulation, the two possible options are: 1) 
no legislative action; 2) legislative action. 

The  first  option  would  imply  that,  despite  the  repeal  of  Regulation  No  4056/86,  Regulation 
No  954/79  would  remain  in  force,  although  inapplicable.  This  solution  appears  not  to  be  in 
line with the consistency of Community law and its simplification.  

The repeal of the regulation, on the contrary, will contribute to put the maritime acquis in line 
with the reform of liner shipping which will be achieved very soon. 

As already mentioned, the need for the Member States to withdraw from the UNCTAD Code 
of conduct is not a consequence of the repeal of Regulation 954/79 but rather of the repeal of 
Regulation 4056/86. It should be noticed, however, that when Member States withdraw from 
the Code, the latter will remain in force among the other parties. 

Against  this  background  it  should  be  recalled  that  the  economic  impact  on  the  European 
shipping  industry  of  the  phasing-out  of  shipping  conferences  in  the  Community  (and  the 
consequent withdrawal by Member States from the Code) has been examined by the impact 
assessment study carried for the proposal for a regulation repealing Regulation No 4056/86. 
Equally, the Commission has already assessed the impact of the repeal of Council Regulation 
4056/86 on developing countries, many of which are party to the Code.  

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

It is proposed to repeal Council Regulation (EEC) No 954/79  

•  Legal basis 

Article 80 of the Treaty 

•  Subsidiarity principle 

The  proposal  falls  under  the  exclusive  competence  of  the  Community.  The  subsidiarity 
principle therefore does not apply. 

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•  Proportionality principle 

The proposal conforms to the principle of proportionality since the only way to repeal Council 
Regulation (EEC) No 954/79 is adopting a Council regulation. 

The proposal implies no administrative burden on any authority, of the Community, national, 
regional  or  local.  The  administrative  burden  for  the  governments  of  the  Member  States 
consisting  in  withdrawing  from  the  UN  Code  of  Conduct  for  Liner  Conferences  is  not  a 
consequence of the present proposal - since Regulation No 954/79 does not oblige Member 
States to become party to the Code - but rather an effect of the repeal of Council Regulation 
No 4056/86.  

•  Choice of instruments 

Proposed instruments: regulation. 

Other means would not be adequate for the following reason: the proposal aims at repealing a 
Council regulation, only a Council regulation might have been used. 

4. 

Budgetary implication 

The proposal has no implication for the Community budget. 

5. 

Additional information 

•  Simplification 

The proposal provides for simplification of legislation. 

When the proposal is adopted a legal instrument which will become inapplicable is removed 
by the Community set of rules 

•  Repeal of existing legislation 

The adoption of the proposal will lead to the repeal of existing legislation. 

•  European Economic Area 

The  proposed  act  concerns  an  EEA  matter  and  should  therefore  extend  to  the  European 
Economic Area. 

•  Entry into force 

For reasons of legal consistency, the repealing of Council Regulation n° 954/79 should entry 
into force at the moment of the repeal of the exemption from the prohibition in Article 81(1) 
of  the  Treaty  in  respect  of  shipping  conferences,  that  is  to  say  at  the  end  of  the  two  years 
transitional  period  foreseen  by  art  1,  second  paragraph,  of  Council  Regulation  (EC) 
No 1419/2006 repealing Regulation n°4056/86. 

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2006/0308 (COD) 

Proposal for a 

EUROPEAN PARLIAMENT AND COUNCIL REGULATION 

repealing Council Regulation (EEC) No 954/79 concerning the ratification by Member 
States of, or their accession to, the United Nations Convention on a Code of Conduct for 
Liner Conferences 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
80 (2) thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the European Economic and Social Committee2, 

Having regard to the opinion of the Committee of the Regions3, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty4, 

Whereas: 

(1) 

(2) 

(3) 

1 

2 

3 
4 
5 

6 

7 

Council Regulation (EEC) No 954/79 of 15 May 1979 concerning the ratification by 
Member States of, or their accession to, the United Nations Convention on a Code of 
Conduct for Liner Conferences5 provides for requirements that Member States have to 
fulfil when ratifying the United Nations Convention on a Code of Conduct for Liner 
Conferences, or when acceding thereto. 

The Convention on a Code of Conduct for Liner Conferences sets out an international 
regulatory framework for shipping conferences, namely by means of rules on access to 
cargo  shares  by  ship  owners  established  in  the  territories  of  the  States  Parties  to  the 
Convention and serving their mutual foreign trade. 

Council Regulation (EC) No 1419/2006 of 25 September 20066 has repealed 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  transport7  which, 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ L 121, 17.5.1979, p. 1 
OJ L 269, 28.9.2006, p. 1 
OJ L 378, 31.12.1986,p. 4 

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(4) 

(5) 

amongst others, provided for an exemption from the prohibition in Article 81(1) of the 
Treaty in respect of shipping conferences.  

At the end of the transition period provided for by Regulation (EC) No 1419/2006, the 
prohibition in Article 81 (1) of the Treaty will apply to scheduled maritime transport 
services  and  as  a  consequence  shipping  conferences  will  no  longer  be  allowed  to 
operate in trades to/from the ports of the Member States.  

The Member States will therefore be prevented from fulfilling their obligations under 
the Code. At that time Member States will no longer be in a position to ratify, approve 
or  accede  to  the  Code.  Regulation  (EEC)  No  954/79  will  therefore  become 
inapplicable and should be repealed at the end of the transition period provided for in 
the  second  paragraph  of  article  1  of  Regulation  (EC)  No  1419/2006,  that  is,  on  18 
October 2008. 

HAVE ADOPTED THIS REGULATION: 

Regulation (EEC) No 954/79 is repealed. 

Article 1 

Article 2 

This Regulation shall enter into force on 18 October 2008.  

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

Done at Brussels, […] 

For the European Parliament 
The President 

For the Council 
The President 

[…] 

[…] 

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