EU Competition Consortia Block Exemption Extended for Five Years

Consortia agreements typically allow liner shipping carriers to rationalise their activities and achieve economies of scale. If consortia face sufficient competition and are not used to fix prices or share the market then users of services provided by consortia are usually able to benefit from improvements in productivity and service quality.

However, consortia agreements are potentially anti-competitive.  However, the Commission exempted consortia agreements in 1995 and then prolonged the regime several times.

A market investigation by the Commission, conducted in 2013, showed that the main tenets of the Commission's approach are still valid. This has been confirmed by a public consultation conducted by the Commission in early 2014. The Commission thus decided that the exemption has worked well, providing legal certainty to agreements which bring benefits to customers and do not unduly distort competition, and that current market circumstances warrant a prolongation.

On 24 June 2014, the European Commission decided to extend for another five years the validity under Article 101 of the TFEU of the European Commission’s block exemption regime for liner shipping consortia until April 2020.

The Commission’s renewed consortia block exemption regulation allows shipping lines with a combined market share of below 30% to enter into cooperation agreements to provide joint cargo transport services.

The Commission commented, at the time of the extension, that for “consortia and alliances exceeding the market share threshold established in the block exemption regulation, it is the responsibility of the companies themselves to make sure that their agreements comply with Article 101 TFEU, and the Commission can decide to intervene if necessary. The Commission will continue to closely monitor market developments and the conduct of companies to ensure that markets remain open and competitive. In particular, in the context of the recent developments in the sector, the Commission will remain vigilant as regards any risks for competition that may arise from the implementation of maritime consortia and might intervene if necessary.”

For further information: contact Dr Vincent Power (vpower@algoodbody.com) or any member of A&L Goodbody’s EU, Competition & Procurement or Shipping Law teams.