Opinion of the European Economic and Social Committee on the Guidelines on the application of Article 81 of the EC Treaty to maritime transport services (Additional Opinion)
Date: 2008-03-12
Institutions: European Economic and Social Committee
Subjects: application of EU law, competition law, maritime transport, services contract, transport company

9.8.2008

EN

Official Journal of the European Union

C 204/43

Opinion of the European Economic and Social Committee on the Guidelines on the application of
Article 81 of the EC Treaty to maritime transport services (Additional Opinion)

(2008/C 204/11)

On 20 November 2007, the Bureau of the European Economic and Social Committee, under Rule 29 A of
the Implementing provision of Rules of Procedure, decided to draw up an additional opinion on the

Guidelines on the application of Article 81 of the EC Treaty to maritime transport services.

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 19 February 2008. The rapporteur
was Dr Bredima.

At its 443rd plenary session, held on 12 and 13 March 2008 (meeting of 12 March), the European
Economic and Social Committee adopted the following opinion by 117 votes with 6 abstentions.

1. Conclusions

The EESC believes that the structure and the current
1.1
wording of
the draft Guidelines can for the most part be
endorsed. However, it notes a difference in details between the
chapters on liner shipping and tramp shipping (pools). The
section on information exchanges in the liner shipping chapter
is fairly detailed and seems to be relatively helpful in terms of
describing and interpreting relevant case law and decision-
making practice on the subject. Overall, the draft Guidelines for
liner services seem clear and are based on existing case law and
long,
thorough discussions with the industry. On the other
hand, the sections on tramp shipping in general and tramp ship-
ping pools in particular are less detailed. The EESC presumes
that this lack of detail is to a large extent due to an absence of
case law and therefore of experience of the relevant (compe-
tition)
European Commission,
regarding tramp shipping and tramp shipping pools as there
have been no formal complaints from charterers as yet.

authorities,

including

the

The EESC reiterates its calls in earlier Opinions (2004,
1.2
2006, 2007) for the EU to enter into meaningful consultations
with other jurisdictions with a view to determining the compat-
ibility between existing regimes governing liner trades world-
wide. Furthermore, the EESC reiterates its recommendation in
the same Opinions that the European Commission should also
take the human resources aspect (e.g. impact on employment
for European seafarers)
into consideration — in addition to
purely competitive factors — when dealing with competition
rules with regard to maritime transport.

1.3
The EESC suggests using illustrative examples to specify
the content of the (draft) Guidelines dealing with liner shipping,
particularly where data are considered ‘historic’.

As the sections dealing with tramp shipping and tramp
1.4
shipping pools are less detailed for the reasons presumed above,
the EESC wonders whether they will be sufficient enough to
provide tramp (pool) operators with the required guidance to
carry out a self-assessment of the cooperation agreements in
which they are involved. It is possible that some greater clarity
on certain sections of the draft Guidelines dealing with tramp
shipping (pools) may be needed. Equally,
it may be worth
considering extending the consortia Regulation, which is specifi-
cally limited to container trades at the moment, to cover other
relevant segments of the global shipping market as well.

The EESC stresses that shipping pools do not constitute
1.5
the majority of the tramp shipping markets. Indeed, the vast
majority of tramp vessel services are operated by many small or
medium sized companies that compete with each other for
cargo. For this reason, the EESC maintains that specific clarifica-
tion in the Guidelines acknowledging this point is required.
Moreover, the European Commission should also have given
more guidance on the application of the de minimis rule to
pools that are too small to have any appreciable effect on their
markets.

1.6
It is disappointing that the guidance given on tramp
shipping pools does not entirely answer the questions that are
causing uncertainty and even concern for tramp pool operators.
The EESC agrees with the perception that can be inferred from
the draft Guidelines that tramp shipping pools are per se not in
conflict with EC competition law but it urges the European
Commission to give more specific guidance in the final version
of
to
the Guidelines regarding application of Article 81(3)
tramp shipping pools to provide the necessary tools to carry
out self-assessments.

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1.7
It is noteworthy that the draft Guidelines do not define
what they mean by ‘tramp shipping’ and it is therefore not clear
whether they apply also to maritime passenger transport and/or
to specialised shipping. It might be worth considering clarifica-
tion on this point as well.

ences on trades to or from the EU will be abolished as from
18 October 2008 — address permitted means of sharing
market information between liner operators. Although certain
details may need refinement, the Guidelines as drafted will prob-
ably just about provide the liner industry with the kind of infor-
mation exchange it needs to function properly.

1.8 Moreover, with regard to the tramp shipping chapter, the
EESC suggests that the Guidelines clarify that a shipbroker's
activities do not essentially differ from the activities of a pool
manager with regard to setting prices. Tramp shipping markets,
including those within which tramp shipping pools are oper-
ating, are bidding markets, i.e. prices are determined between
price-negotiating parties and are based on supply and demand.
The mere fact that a pool manager agrees a price with a char-
terer for use of a pool vessel does not therefore constitute ‘price
fixing’ as a hardcore restriction.

3.2
From 18 October 2008, liner carriers operating services
to and/or from a port in the EU must cease all anti-competitive
liner conference activities, regardless of whether such activities
are permitted by other jurisdictions around the world. The EESC
maintains that it will be difficult for globally-operating carriers
to ensure that liner conference activities that are unlawful in the
EU do not appreciably affect the EU market.

2. Introduction

2.1
On 13 September 2007 the European Commission
published its long-awaited draft Guidelines on the application of
EC competition rules to the maritime transport services. The
Guidelines apply to cooperation agreements in the maritime
service sectors directly affected by the changes
transport
brought about by Regulation 1419/2006 applying to cabotage,
liner and tramp shipping services. They are aimed at providing
guidance to assist shipping companies in carrying out a self-
in which they are
assessment of cooperation agreements
involved, i.e. they should enable the relevant companies to deter-
mine whether their cooperation agreements are compatible with
Article 81 of the EC Treaty. The Guidelines will be valid for an
initial period of five years.

2.2
The draft Guidelines aim in particular to shed light on
the conditions under which liner operators may lawfully
exchange freight information and under which tramp operators
may enter into pooling arrangements. A complex set of para-
meters is set forth to that end. However, the real added value of
the (draft) Guidelines in practice will have to be assessed in the
the (draft) Guidelines provide the required
future, e.g. will
their
guidance for operators to determine the lawfulness of
intended conduct in the market?

3. General observations

Liner Shipping Services

3.3
As far as liner shipping is concerned, the spotlight is on
information exchange systems. Liner companies have been given
some freedom to exchange information.
Important elements
include market structure, the type of information exchanged,
how old it is and the frequency of the data exchange. The focus
is rightly on the exchange of future data, notably capacity fore-
casts and price indices. It seems that capacity forecasts are prima
facie always likely to be unlawful. The EESC acknowledges that
the effects of information exchange must be considered on a
case-by-case basis.

3.4 With regard to price indices, an aggregated price index is
unlikely to infringe the law, unless the information can be disag-
gregated so as to allow undertakings directly or indirectly to
identify the competitive strategies of their competitors. The level
of aggregation, the ‘historic’ or ‘recent nature’ of the data and
the frequency of publication should be assessed, but the draft
Guidelines do not specifically state how much importance
should be attached to these factors.

3.5
As far as liner services are concerned, the Guidelines do
not contain any genuinely novel element, but seem to restate
the general criteria previously developed by the European
Commission and the European Courts.

3.6
The EESC reiterates its calls in related earlier opinions (1)
for the EU to enter into meaningful consultations with other
jurisdictions with a view to determining the compatibility
between existing regimes governing liner
trades worldwide.
Furthermore, the EESC reiterates its recommendation in the

3.1
The draft Guidelines dealing with liner shipping — apart
from confirming what is already known i.e. that liner confer-

(1) OJ C 256, 27.10.2007, p. 62–65; OJ C 309, 16.12.2006 p. 46-50; OJ

C 157, 28.6.2005, p. 130–136.

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same opinions that the European Commission should also take
the human resources aspect (e.g.
impact on employment for
European seafarers) into consideration — in addition to purely
competitive factors — when dealing with competition rules
with regard to maritime transport.

Tramp Shipping Services

3.7
Tramp shipping services are global and highly competi-
tive and they satisfy many of the characteristics of the perfect
competition model. The commodity is homogeneous and entry
costs are generally very low. Many companies compete for busi-
ness, with substitution taking place between the different vessel
sizes and vessel
types depending on market circumstances.
Information flows also make the market very transparent. Busi-
ness is mainly carried out on the basis of voyage charters, conse-
cutive voyage charters, contracts of affreightment or time char-
ters. The freight rates achievable in these markets are highly
volatile, depending on market circumstances. Finally,
tramp
shipping markets are able to respond rapidly to market develop-
ments and to shippers' needs (2).

3.8
Shipping pools operate in every sector of the tramp ship-
ping business. A ‘pool’ is a collection of similar vessels, under
different ownership, operating under a single administration.
The pool manager manages the vessels as a single, cohesive fleet
unit, collects their earnings and distributes them under a prear-
ranged ‘weighting’ system, while the individual owner is left
merely to conduct the nautical/technical operation of the ship.
Pools are generally developed for two reasons. Firstly, they are
set up to allow participants to provide the service levels that
their major customers increasingly demand. Secondly, they aim
to improve transport efficiency by special
investment and
increased ship utilisation. Pools operate in an environment of
supply and demand where contracts are concluded on the basis
of tenders, rates are driven to a large extent by a spot market,
buyers are large and sophisticated and brokers offer an excep-
tional visibility of tonnage and conditions at any given time.

3.9
The EESC stresses that shipping pools do not constitute
the majority of the tramp shipping markets. Indeed, the vast
majority of tramp vessel services are operated by many small or
medium-sized companies that compete with each other for
cargo. For this reason, the EESC maintains that specific clarifica-
tion in the Guidelines acknowledging this point is required.

granting enforcement powers to the European Commission with
regard to these services. However, during this period there have
been no formal complaints from charterers with regard to this
sector and there has been no case law. The EESC presumes that
it is the lack of case law and thus experience of relevant (compe-
tition) authorities,
that
explains why the sections of the draft Guidelines dealing with
tramp shipping (pools) are less detailed than those on liner ship-
ping. It is also noteworthy that the draft Guidelines do not
define what they mean by ‘tramp shipping’ and it is therefore
not clear whether they also apply to maritime passenger trans-
port and/or to specialised shipping. It might be worth consid-
ering clarification of this point.

including the European Commission,

3.11
The draft Guidelines do not take sufficient account of
the specifics of the tramp sector and appear to follow the non-
sector specific Guidelines on Horizontal Cooperation. Shipping
pools will have to conform to the same Guidelines applied to
other industry sectors to ensure that they do not inhibit free
competition or behave like a cartel.

3.12
The draft Guidelines are quite general and do not
provide precise legal certainty. They do not explicitly state that
shipping pools are incompatible with EU competition law but
they do not provide the guidance as to when they are.

3.13
The most crucial section of the draft Guidelines is that
dedicated to the assessment and classification of shipping pools.
The starting point is the finding that pools generally involve
joint production
joint marketing and varying degrees of
features.

3.14 With regard to the relevant market, the EESC maintains
that the Guidelines should take into better account the fact that
there is a substantial element of substitutability or interchange-
ability in tramp shipping on both the demand as well as the
supply side, (e.g. with regard to vessel type, vessel size, types of
transportation contracts and geographic market). Moreover, if a
pool has to do a self-assessment, market shares cannot be
defined for each and every contract but they have to be assessed
over a given time period.

3.10
The EESC notes that tramp vessel services as well as
tramp shipping pools have always been subject to EC competi-
tion law, i.e. long before the adoption of Regulation 1419/2006

(2) Fearnleys Report, ‘The Legal and Economic Analysis of Tramp Maritime
Services’, February 2007, p. 14-31. http://ec.europa.eu/comm/compe-
tition/antitrust/legislation/maritime/tramp_report.pdf.

3.15
The EESC believes that improvements will be necessary
with regard to the relevance and definitions of market share
enjoyed by shipping pools and ‘substitution’ between trades and
ship types. It acknowledges that no practical guidance is given
regarding the definition of the relevant market. However, market
shares could be quite different according to the methodology
used.

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fundamental characteristics,

The EESC believes that, given the purpose of pool
3.18
agreements and their
the four
conditions contained in article 81(3)EC are typically fulfilled to
exempt pools. The fact that pools were established to respond
to the needs and requirements of charterers and have for
decades operated without complaint supports this view.

3.19
The EESC hopes that the European Commission will
keep the Guidelines under constant review in the light of experi-
ence and, if necessary, bring out supplementary or clarification
guidance as and when it is available without waiting for the
five-year period to expire.

The Commission should at the earliest possible oppor-
3.20
tunity begin reviewing the scope of the liner consortia block
exemption and on this occasion examine the need to cover also
other relevant segments of the global shipping market, particu-
larly those tramp trades that operate on a regular basis on
regular
(e.g.
conventional reefer vessels, timber trades and specialised car
carriers and ro-ros).

routes, a feature of

specialised trades

several

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

In the assessment of

3.16
tramp vessel pool agreements
within the context of Article 81, it should be emphasised that
the pool manager ‘manages’ the fleet put into the pool in both
terms and hence offers a joint
operational and commercial
product through a single pool entity. The tendering of vessels in
the market is de facto ancillary to the pool manager's task of
managing the service being offered. Individual owners, for their
part, retain responsibility for the pure nautical/technical opera-
tion of the vessels. Pools provide a jointly ‘produced’ service
that is the result of a significant degree of integration of the
parties' activities (3). Thus, pool agreements should be assessed
on a par with other forms of joint production or specialisation
agreements.

3.17
The EESC maintains that any reference to ‘price fixing’
as a characteristic of pool functioning (and hence as a hardcore
restriction of competition) cannot be sustained in the Guidelines
on the basis that the agreement of the price between the pool
manager and the customer is an inherent part of the service
being offered and it is the result of a price negotiation for use of
a pool vessel in a bidding process.

Brussels, 12 March 2008.

(3) Fearnley's Report (2007): the authors of this report have reached the

same conclusion.