China’s ministry of commerce explains decision to block P3

The tough stance taken by the Chinese government has led to the disapproval of the P3 Network, effectively closing the book on shipping’s potentially revolutionary partnership.

“The ministry of commerce does not object to enterprises using their own resources to achieve competitive standings in the market. But for these already powerful enterprises to further their market dominance by entering into alliances, there will be a need to seriously analyse the impact on competition,” the ministry said.

The P3 members – Maersk Line, CMA CGM and Mediterranean Shipping Company (MSC) – submitted their proposal to the Chinese authorities in September 2013.

The ministry said it has carefully considered the various impacts of the P3 Network in the areas of market share, market dominance, barriers to entry, industry characteristics and other relevant factors, before coming to a decision.

“The combined capacity of the three P3 members would give them a 47% market share in the main Asia-Europe container shipping trade,” the ministry said.

The ministry argued that P3 would bring about “adverse effects on restricting competition” and that the alliance’s proposal “lacks appropriate and convincing evidence” to proceed.