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EC ends container lines’ consortia block exemption

Photo: EU/Mauro Bottaro EU flags fluttering in the wind
The EC announced yesterday that container shipping’s much contested Consortia Block Exemption Regulation (CBER) will not be renewed after it expires on 25 April 2024.

The regulator has been reviewing the CBER since 2022 and was widely expected to give a ruling at the end of last year, after a review process that requested views from industry had concluded in late 2022.

In making its decision the EC said that the CBER had a “low or limited effectiveness during the 2020-23 period”.

Adding: “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 co-operate. 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.”

In a carrier response to the decision taken by the EC, the carrier representative body the World Shipping Council John Butler, President & CEO of the World Shipping Council, said that the EC’s recognition of the benefits of vessel sharing agreements is critical going forwards.

“The shift to general EU antitrust rules will create a period of uncertainty as carriers adjust to the new legal structure. Nevertheless, vessel sharing agreements will remain a fully legal and supported way for carriers to ensure efficient and sustainable transport for Europe,” added Butler.

EC regulators had also been in discussions with regulators in the US and Asia and these other jurisdictions are expected to follow suit, not least because as James Hookham, Director at the Global Shippers’ Forum (GSF) pointed out, it would be difficult for lines to operate under different sets of rules in other jurisdictions, ultimately raising costs.

However, WSC spokeswoman Anna Larrson also commented that “there is nothing much for others to follow”.

She said: “Vessel sharing remains fully lawful and supported in the EU. What DG COMP is recommending is simply to move the regulation of vessel sharing from a sector specific CBER to the general Horizontal Block Exemption Regulation and Specialisation Block Exemption Regulation. Vessel sharing is a tool that remains recognised by regulators around the world as providing a foundation for the reliable movement of international trade with no downside from a competition perspective, as consortia partners continue to compete fiercely on price.”

Predictably freight forwarders welcomed the EC’s decision, with Nicolette van der Jagt, the Director General of the forwarders’ association CLECAT, noting: ‘We are pleased that the Commission has listened to the voice of the customers, freight forwarders and their shipper clients. For many years, we have told the European Commission that the Regulation is no longer fit for purpose.”

According to van der Jagt the decision to discontinue the CBER means that there is a “better basis for trust” between the lines and their customers.

She also pointed out that the process to review consortia in the US had already begun, but that it had been slowed by the political nature of the decision there.

Meanwhile, Hookham pointed out that while VSA’s were welcomed and an efficient way to operate services, he also said that the end of the CBER meant that “Carriers would need to conform to a higher standard of confidentiality”.

He said that if consortia survive the end of the CBER, however, capacity management may also remain as a feature of the liner trade.