CMA will not recommend renewal of shipping competition exemption
The CMA will not recommend renewing a ‘block exemption’, which provides an exemption from competition law for certain forms of cooperation between liner shipping companies.
The decision follows feedback submitted to the Competition and Markets Authority (CMA) from shipping companies, their customers and representative trade bodies after it consulted the sector last year.
What is a block exemption?
It provides an exemption from competition law for a particular category of agreement between businesses. Block exemptions are generally made when the agreements in question are unlikely to breach competition law, and there is a value or benefit in providing legal certainty.
Background
The Liner Shipping Consortia Block Exemption Regulation (CBER) was introduced by the European Commission in 2009. It was retained into UK law at the end of 2020, when the UK left the EU, and is due to expire in April 2024.
The CMA has a role in recommending new block exemptions to government. With the CBER expiring in April 2024, the CMA has considered whether to recommend a new UK block exemption to replace it.
Findings and decision
The CBER covers certain forms of cooperation between liner shipping companies, called ‘consortia’. Cooperation between shipping companies through consortia can bring benefits, but it can also reduce competition between them, which can weaken their incentives to keep charges competitive and improve service standards.
As part of the CMA’s consultation with the industry, it received feedback from some customers of liner shipping companies that they are not seeing the benefits from companies participating in consortia, including concerns about charges and service quality.
It may be the case that particular consortia can be justified when looked at individually, and allowed under competition law. But the CMA’s view is that they should not benefit from the automatic exemption, which a block exemption offers. The CMA has therefore decided not to recommend a new block exemption to replace the existing CBER.
In reaching this decision, the CMA has also taken into account 2 additional factors:
First, many liner shipping companies already have to self-assess their consortia because their combined market share exceeds the thresholds allowed under the block exemption.
Secondly, liner shipping services to the UK currently call at ports in the EU as part of the same overall service. Liners operating these services will also need to consider compliance with EU competition law, following the EU’s decision to let its own block exemption lapse, alongside needing to consider compliance with UK competition law. Given that no automatic exemption will apply in the EU, the value of an automatic exemption under UK law is therefore significantly reduced.
More information is available on the CMA’s case page.
Noted to editors
- The EU Liner Shipping Consortia Block Exemption Regulation was retained in UK law when the UK left the EU and became assimilated law with effect from 1 January 2024. It is due to expire in April 2024.
- In November 2023, the CMA consulted on a provisional decision that it would not recommend replacement of the CBER. The CMA has considered the feedback received before reaching its final decision. Reponses to the CMA’s provisional decision have been published on the CMA’s case page, and a summary of responses is included in the final decision.
- For media enquiries, contact the CMA press office on 020 3738 6460 or press@cma.gov.uk.