The European Commission has decided to end a rule exempting liner shipping services from certain EU antitrust rules, by letting the Consortia Block Exemption Regulation (CBER) expire on April 25, 2024. The decision came after the European Commission concluded that the CBER “is no longer fit for purpose.”
In general, EU antitrust rules prohibit agreements between competitors that restrict competition. In the cargo shipping industry, this is relevant for shipping companies (carriers) operating to or from the EU. The CBER offers an exemption from these rules. It allows carriers, under certain conditions, to enter into cooperation agreements to provide joint cargo transport services (the so-called consortia). This is provided that their combined market share is below 30% and that they don’t engage in hardcore restrictions such as fixing prices or sharing markets. The CBER was adopted in 2009 and has since been extended twice.
No Longer Fit for Purpose
The decision not to extend the CBER for the third time followed an evaluation process launched in August 2022. According to the European Commission, the evaluation pointed towards the low or limited effectiveness and efficiency of the CBER throughout the 2020-2023 period. “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. 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 European Commission explained in its release.
Is This Important?
Following the expiry of the CBER, the next step is for all consortia to self-assess the compliance of their cooperation agreements with EU antitrust rules. This does not mean that consortia automatically become unlawful. Instead, carriers will need to carry out the assessment using the guidance provided in the Horizontal Guidelines and the Specialisation Block Exemption Regulation. These are the general rules that apply to all economic sectors. The European Commission concluded that this move will not lead to legal uncertainty, arguing that most of the consortia active in the EU fall outside the scope of the CBER anyway (e.g., they exceed the 30% market share limit) and have always had to self-assess.
However, will navigating EU antitrust rules truly remain unaffected? Let us recall that a specific safe harbor, such as the CBER, provides comfort also in relation to cooperation agreements that just fall outside of its scope. In the past, carriers falling outside the scope of the CBER were still guided by the CBER in their self-assessment, by at least knowing what is unproblematic. For instance, the CBER clearly set out that the use of a computerized data exchange system or an obligation to refrain from chartering space on vessels belonging to third parties was lawful. Also, the CBER provided clear guidance on the right of members to withdraw from the consortium, with protections such as a prohibition on penalties and a maximum notice period of six (exceptionally twelve) months. Even if a consortium was slightly above the market share threshold, it could rely on competition authorities or indeed courts to rely on those rules as a framework within which it could relatively safely operate.
Now, in the absence of sector specific guidance, carriers will have to rely on general rules which may not be sufficient help for an industry with very specific characteristics. Therefore, it cannot be excluded that carriers will be more careful in their assessment in the future, with the most conservative approach becoming the common denominator.