CENTER FOR MARITIME ECONOMICS & LOGISTICS (MEL)

MEL IN THE PRESS

Journal of Commerce
Monday, February 16, 2004

Mario Monti
Competition Commissioner, European Commission

The European Union's antitrust czar is in the process of leaving what could be a lasting mark on the liner shipping industry. He has launched an in-depth probe of the EU's maritime transport competition rules that could result in the demise of the conference system that has been a bedrock of liner shipping since the late 19th century. Monti is questioning whether conference lines should continue to enjoy an exemption from competition rules, bestowed by EU governments in 1986, that allows them to collectively set freight rates - a freedom that's denied almost every other sector. The former Italian professor of economics clearly has his doubts. "Some observers might perhaps wonder whether evidence of economic behavior in the late 19th century was really an unquestionably solid basis for a decision to grant an exceedingly generous exemption in the late twentieth century ..." he wondered aloud at the European Shippers Council annual gathering last year. Monti says the outcome of his investigation isn't a foregone conclusion - a panel of five "wise men" (led by Professor Haralambides) appointed by his office argues that "restrictions in competition, in the form of shipping conferences, are a low-cost way to ensure the liner market is sustainable." But he insists that the onus is on shipowners to "make the case" for continued antitrust immunity by proving it is necessary to promote market stability and benefit consumers. Carriers are wary of Monti but respect him more than his combative predecessor Karel van Miert who made good his vow to "teach them a lesson" by slapping a then EU record fine of $342 million on the 16 members of the Trans-Atlantic Conference Agreement for abuse of dominant position. The European Court of Justice annulled the fine on a technicality and Monti approved a revised TACA in the face of stiff shipper opposition and extended the block-anti-trust exemption for container consortia. Monti will step down as competition czar in November when a new commission takes office, but the investigation he launched will roll on with unforeseen consequences for container shipping, both Europe and the U.S.