MEL IN THE PRESS

Lloyds List
November 18, 2003

Liner operators press Brussels for 'onus of proof' balance
 

Liner shipping companies are stepping up pressure on Brussels to promise that a review of industry regulations will not be one-sided, and that shippers as well as carriers should have to prove their case.

With just over a fortnight to go before an all-important public hearing, ocean carriers are urging the European Commission to drop its insistence that the onus of proof is on the lines to show their antitrust immunity is necessary.

As the campaign to preserve the special concessions that permit joint price fixing moves into top gear, container lines have been assured that the EU's transport directorate is taking an interest in the competition directorate's review of Regulation 4056/86 that details the application of European competition rules to maritime transport.

Loyola de Palacio, the EU's transport commissioner, told the Danish Shipowners' Association earlier this month that her department would be following the process to ensure shipping as well as competition interests are represented.

The transport commissioner also encouraged shipowners with the reminder that the EU's competition regulators understood the special nature of the industry, as demonstrated by their acceptance of state aid guidelines for shipping.

The December 4 hearing has been divided into three main themes to be addressed during the course of the day.

Container lines, transport users, and other interested parties including international organisations will be asked to discuss whether or not liner conferences provide price stability and reliability of service, and whether antitrust exemption is indispensable for obtaining these market conditions.

Brussels has already received answers to a questionnaire that was sent out earlier in the year, and now plans to give respondents an opportunity to express their views in person.

Information and data contained in the replies have been checked by independent experts including William Sjostrom of the National University of Ireland, Professor Hercules Haralambides of Erasmus University in Rotterdam, and Michael Fusillo of Piers Maritime Research Services. Their findings are to be published later this week.

The commission received so many requests to speak at next month's hearing that the numbers will be limited to those that can contribute to what Brussels describes as a fact-finding exercise.

Brussels has also assured those taking part that the program has been drawn up so as to ensure a balanced representation of all stakeholders, with equal time given to carriers and shippers to make a presentation.

Liner shipping companies, represented at the hearing by the European Liner Affairs Association, want to preserve their antitrust exemption so that conference members can publish a common tariff. However, many shippers are calling for free market forces to prevail, with no immunity from competition law.

What concerns carriers is a speech from competition commissioner Mario Monti a few months ago, and subsequent remarks from Brussels officials, asserting that the burden of proof is on the lines to show that the current regulatory regime should be preserved.

Brussels claims that European case law supports this position that the onus is on those wishing to benefit from the exemption.

However, the lines argue that opponents of the liner conference system should be required to show that an end to the system would deliver net benefits to all concerned.

Participants are being asked to discuss what is the relevant price to be used when considering the issue of stability, and then what period of time should be covered when deciding whether there has been freight rate stability.

Next on the agenda is the question of whether conferences can be distinguished from other operational agreements when considering the normal dynamics of supply and demand.

The commission also wants a discussion on alternatives to price-fixing and to find out if there are other ways that are regarded as less anti-competitive while still offering price stability and service reliability.