China Shippers Association firmly supports MOC to ban P3

Monday, 23 June 2014 00:00 - - {{hitsCtrl.values.hits}}

China Shippers Association in a statement said it appreciates and welcomes the very correct and wise decision made by China’s Ministry of Commerce (MOC) on banning the formation of P3 network composed of Maersk, CMA – CGM & MSC. Before making such decision, MOC spent more than half a year to make detailed investigations, consulting with relevant departments, associations, shipping companies as well as port authorities, looking into this issue from the international angle and finally make a very wise, objective and fair decision, aiming at keeping the international maritime transportation in good order and safeguarding the interests of the medium and small carriers, small ports as well as shippers,consumers all over the world. The decision fully embodies the principal and spirit of fairness and justice of the anti-trust law. As known to all, the existing liner conferences or discussion agreements have already abused their monopolistic and dominant power for decades to impose more than 20 kinds of unreasonable surcharges to FOB (free on board) export shippers who have no contract relations with the liners. Shippers have to pay the unreasonable surcharges in order to get the bill of lading. China and the rest of the Asian countries or regions suffered a great deal from the liner blocs.

“We hope all government authorities will show concern for this issue and stop the liner blocs illegal actions in order to create a good environment for both carriers and shippers in international trade and transportation,” China Shippers Association said. On 17 June, the Ministry of Commerce announced the decision on banning of the formation of the P3 network composed of Maersk, Mediterranean shipping, CMA-CGM shipping companies. The case involved in three of the world’s biggest shipping companies to carry out a large-scale cooperation that will have a far-reaching influence on the global shipping industry, caused high attention from all walks of life. The Ministry of Commerce do not oppose enterprises to gain market competitive advantage, but for those enterprises who already have a certain market forces want to further enhance market power and market dominant position through concentration operation, need to carefully analyse and evaluate its impact on competition. After evaluating its market share, market control, market entry, industry characteristics and other factors, MOC realised that after the completion of the centralised transaction, the P3 will form closer affiliation, and the capacity share of container liner transportation services in Asia-Europe route of P3 reach about 47%, the market concentration has also greatly increased. During the period of review, the Ministry of Commerce pointed out the concentration of the applicant may have the effect of eliminating or restricting market competition, and for many times discussed with the applicant as to how to reduce the adverse effect of the concentration on competition. The applicant submitted several rounds of relief program. After assessment, the Ministry of Commerce think that the relief programme submitted by the applicant lack of corresponding legal basis and convincing evidence to support, cannot prove that the concentration is of greater beneficial effects than the adverse impact on competition, or in social and public interests. Therefore, based on the anti-monopoly law of the People’s Republic of China, the Ministry of Commerce decided to prohibit the concentration. The director finally stressed that the Ministry of Commerce will continue to focus on the concentration behavior of shipping market, cooperate with relevant government departments, in accordance with law, to maintain the market competition order, protect the interests of consumers. On 18 September 2013 the Ministry of Commerce received the application from the P3 to sets up the network centre. After verification, the Ministry of Commerce think that the case filing data is not complete, and requires the applicant to submit complemented materials or documents. On 19 December 2013, the Ministry of Commerce confirmed that the complement of the declaration documents and materials meet the requirements of article 23 of the ‘anti-monopoly law’, put on record and begin preliminary examination. On 18 January 2014, the Ministry of Commerce decided to review this concentration case further. On 18 April 2014, the Ministry of Commerce decided to extend further review period, the deadline was on June 17, 2014.

GSF states P3 collapse result of legal uncertainties

The Global Shippers’ Forum (GSF) has said that news that the proposed P3 Global Alliance plans have been abandoned was the result of legal uncertainties. The world’s three biggest container shipping groups (Maersk, Mediterranean Shipping Company and CMA-CGM), have had to announce that the plans to set up an operational alliance will no longer go ahead for three of the biggest global trade routes after Chinese regulators blocked the tie-up. Commenting on the collapse of the proposal, GSF Secretary General Chris Welsh said: “The unprecedented size and scale that the proposed P3 Global Alliance was going to pose competition problems for regulators and was also a key GSF concern. We had welcomed the recent monitoring arrangements for the proposals, but the P3 appears to have failed the legal hurdles under Chinese competition law which we always recognised was likely to be both an unknown factor and problematic.” The GSF had raised its concerns through a series of questions to both the US FMC and the European Commission on a number of occasions, stating that the agreement raises the potential for restrictions on competition and whether the P3 lines could genuinely compete against each other due to the unprecedented extent of commonality of costs resulting from the P3, including the potential risk of collusion on rates and capacity due to the wide-ranging scope of co-operation specified within the agreement. The group had hoped to form the so-called P3 Alliance in order to boost the number of sailings on Asia-Europe, trans-Pacific and transatlantic routes by entering into a large scale vessel sharing agreement. The GSF had called on international regulators to fully investigate the impact on price and service of the P3, and had asked for appropriate changes to ease competition concerns, outlining how the Alliance would ‘fundamentally change the structure of container shipping markets’. We were pleased that the FMC agreed to monitor the competitive behaviour of the P3 and similarly recent confirmation that the European Commission would monitor the Agreement’s compliance with EU competition rules.