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BRUSSELS: The European Commission (EC) will not extend the EU legal framework that has exempted container shipping alliances from EU antitrust rules - the Consortia Block Exemption Regulation or ‘CBER' - beyond April 25, 2024 as it no longer promotes competition.

The major container shipping consortia, 2M, Oceans Alliance and THE Alliance were formed to share capacity on liner routes to reduce oversupply. Among the members and partners of the three alliances that control a reported 80 percent of the global container shipping market are 10 of the largest shipping lines in the world, including MSC, Maersk and CMA CGM.

The EC adopted the CBER in 2009 for five years and extended the exemption in 2014 and again in 2020 for four more years.

The capacity sharing agreements coincided with the Covid-19 pandemic that disrupted supply chains and escalated demand for space. Prices rose dramatically along with profits for the major carriers between Q1 2020 and Q4 2021. This prompted U.S. president Joe Biden to comment, "When corporations don't have to compete, their profits go up, your prices go up, and small businesses and family farmers and ranchers go under. We see it happening with ocean carriers moving goods in and out of America."

Following government investigations on both sides of the Atlantic, in August last year the Commission launched a call for evidence inviting feedback from stakeholders on the performance of the CBER.

In addition to adversely affecting competition, the EC has concluded the CBER hasn’t allowed smaller carriers to cooperate among each other and offer alternative services to the three alliances.

“Shipping services are crucial to European and world trade. This key sector has undergone significant structural changes, such as carriers’ consolidation, global alliances and vertical integration, resulting in new market conditions, which became apparent during the coronavirus pandemic,” commented Competition Commissioner Didier Reynders.

“Our evaluation has shown that a dedicated block exemption for shipping lines is no longer adapted to those new market conditions. This is why we have decided not to extend the current framework,” he added.

According to a study by MDS Transmodal on behalf of the Commission, notwithstanding the impact of Covid-19 disruption on port and inland logistics capacity as well as labour shortages, an important contributing factor was the shortage of available capacity caused by insufficient investment by the major shipping lines.

MDS also noted that Maersk, MSC and CMA CGM are becoming integrated logistics providers facilitated by the record-high profits they reported in 2020 and 2021.

“The intensification in vertical integration in the liner shipping industry can increase efficiency thanks to improved communications amongst the actors of the supply chain, however, it can also provide increased market power to the integrated carriers at the expense of non-integrated providers,” MDS concluded.

The EC notes the expiry of the CBER does not mean that cooperation between shipping lines becomes unlawful under EU antitrust rules from April 2024. Instead, carriers operating to or from the EU will have to assess whether their co-operation agreements remain compatible with EU antitrust rules.

In anticipation of the expiring CBER, Maersk and MSC announced in early 2023 the termination of their 2M alliance in January 2025.

In a joint statement the two companies noted: “MSC and Maersk recognize that much has changed since the two companies signed the 10-year agreement in 2015. Discontinuing the 2M alliance paves the way for both companies to continue to pursue their individual strategies.”
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