Bloc unveils plan to end cargo shipping 8k8 discountcompanies' collusion

Cargo shipping companies have said the cost of imported goods could rise in the European Union because of a change the bloc is making to its rules for the industry.

The EU's antitrust regulators said this week the bloc will no longer exempt cargo shipping companies from its rules prohibiting anti-competitive agreements. The exemption — in place since 1986 — had let cargo shipping companies break the rules because the bloc accepted that some cooperation could actually boost competition.

The EU's Consortia Block Exemption Regulation, or CBER, let cargo shipping companies with a combined market share of less than 30 percent team up to provide joint cargo transport services, as long as they did not fix prices or carve up the market.

But the bloc said this week the CBER was no longer working.

"Given the small number and profile of consortia falling within the scope of the CBER, the CBER brings limited compliance cost savings to carriers and plays a secondary role in carriers' decision to cooperate," the EU said in a statement. "Furthermore, over the evaluation period, the CBER was no longer enabling smaller carriers to cooperate among each other and offer alternative services in competition with larger carriers."

The EU said it will, therefore, let the exemption expire in April 2024, after which cargo shipping companies will no longer be able to collude.

The Financial Times newspaper said shipping companies have boosted their profits for several years by sharing space on vessels with their rivals and that the EU's decision "has the potential to upend the business of global trade" in what looks to be "the latest sign of a clampdown on the shipping industry".

Mike Garratt, a director at shipping consultancy MDS Transmodal, told the paper: "It really is a big deal. (There were) nine companies who almost seemed to be beyond the law."

He said the companies were able to collude to control "most of the value of world trade".

The EU decided to scrap the exemption from its rules against anti-competitive agreements after receiving submission from 33 customers of cargo shipping customers, who contended that massive global demand should have been forcing down the cost of shipping items.

Didier Reynders, an EU competition commissioner, said the exemption had to be scrapped because the shipping industry had "undergone significant structural changes" in recent years, with significant consolidation of companies and widespread vertical integration.

John Butler, president of the World Shipping Council, told the Associated Press news agency the logic behind the bloc's decision was fl awed and that "the shift to general EU antitrust rules will create a period of uncertainty as carriers adjust to the new legal structure" with price rises likely.