As explained by the European Commission itself, the CBER, adopted in 2009, exempts consortia from the prohibition of Article 101(1) of the Treaty on the Functioning of the European Union (‘TFEU’), provided certain conditions are met.
Those conditions are as follows:
- (i) consortia may not contain hardcore restrictions (price fixing, capacity or sales limitations – except capacity adjustments in response to fluctuations in supply and demand –, allocation of markets or customers);
- (ii) the market shares of consortia may not exceed 30%; and
- (iii) consortia must give members the right to withdraw with a maximum period of notice of 6 months (12 months in case of highly integrated consortia).
In its explanation for not extending the CBER, the Commission stated:
“Since the CBER was adopted in 2009, market developments in the liner shipping sector have shown that a dedicated block exemption regulation is no longer fit for purpose. Overall, the evidence collected from the relevant stakeholders and market participants points towards the low or limited effectiveness and efficiency of the CBER throughout the 2020-2023 period.”
The Commission added:
“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 subordinate role in carriers’ decisions to enter into a consortium.”
Furthering its arguments, the Commission added that the CBER was “no longer enabling smaller carriers to cooperate among each other and offer alternative services in competition with larger carriers”.
In addition, the Commission stated that stakeholders other than carriers have generally called for strengthened supervision of the sector rather than administrative simplification.
This, said the Commission, “tends to show that the balance between the needs of effective supervision and administrative simplification pursuant to Article 103 TFEU, which originally supported the adoption of the CBER, has shifted.”
Importantly, the Commission confirmed that the expiry of the CBER does not mean that consortia are prohibited in the EU. It simply means that they are subject to the EU antitrust rules that apply to all economic sectors.
In particular, the Commission stressed that carriers would need to self-assess the effect of their cooperation under the guidance provided in the Horizontal Guidelines and the Specialisation Block Exemption Regulation.
Addressing concerns about legal uncertainty facing ocean carriers, the Commision said:
“The evaluation of the CBER has shown that the Regulation does not bring as much legal certainty as it aimed to. Most of the consortia active in the EU fall outside the scope of the CBER. However, this has not deterred carriers from cooperating. The expiry of the CBER does not mean that cooperation between carriers would be prohibited under Article 101 TFEU. It only means that, in the absence of a specific regime, carriers will self-assess compliance with Article 101 TFEU by using the extensive guidance provided in the Horizontal Guidelines and the Specialisation Block Exemption Regulation, which apply to all economic sectors.”
The decision was made following feedback from a number of stakeholders, including the UK’s Global Shippers Forum (GSF), CLECAT (European Association for Forwarding, Transport, Logistics and Customs Services), and the World Shipping Council.
The GSF made the following recommendations to the Commission:
“GSF asks the Commission not to renew the Consortia Block Exemption Regulation after 2024, believing its benefits have not been fairly shared with users of liner shipping services in the time since it was last renewed in 2020.”
CLECAT referred to the CBER as “an outdated measure that provides too much interpretative scope for carriers, and which protracts urgently needed enforcement actions”.
However, these opinions were not shared by the World Shipping Council (WSC), the International Chamber of Shipping (ICS), and the Asian Shipowners’ Association (ASA).
In a joint feedback statement, the three aforementioned organisations said that “the CBER is essential” and that “its period of application should be extended”.
“Non-renewal of the CBER would result – at a minimum – in increased compliance costs and decreased agility for carriers looking to create or amend consortia agreements; it could also result in certain carriers refraining from entering into new consortium agreements or even withdrawing from existing consortia,” warned the three shipping organisations, in the feedback document they jointly submitted to the Commission.
The three organisations also claim that CBER offers the following benefits:
- environmental efficiency and an indispensable contribution to the EU’s fight against climate change
- macroeconomic benefits related to investment and job creation and enhanced trading opportunities
- consumer benefits, including lower costs, higher frequencies, and better port coverage
The regulations will be a blow to the many well-known alliances in the shipping sector, including the Maersk and MSC alliance (which admittedly is to be discontinued in 2025 anyway), the Ocean Alliances (comprising of CGM, CMA, Evergreen, Cosco Shipping and Orient Overseas Container Line), and The Transport High Efficiency Alliance (whose members are K-Line, Hapag-Lloyd, NYK, MOL and Yang Ming).
Reacting to the breaking news on LinkedIn, renowned shipping expert Lars Jensen said:
“Time for the carriers to consider the practicalities around the alliances. As far as I understand – but I have to get back and re-read rules and regulations – this does not prevent VSAs and alliances but makes them more difficult to operate.”
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