EU starts formal proceedings against shipping lines

Judging by the direction of container shipping rates it is hard to believe that the carriers are conspiring to artificially inflate prices, however that appears to be the proposition from the European Commission. The organisation’s competition ‘Directorate’ has announced that it will start “formal anti-trust proceedings” based on information it obtained when it raided the offices of a number of shipping companies in 2011. The companies concerned are reported to include Maersk, CMA CGM, Hamburg Sud, Hanjin, Evergreen and Hapag Lloyd but, according to the newspaper Lloyds List, not Neptune Orient Lines.

The European Commission statement said that it was considering if container shipping lines had “engaged in concerted practices, in breach of EU antitrust rules,” commenting that “since 2009, these companies have been making regular public announcements of price increase intentions through press releases on their websites and in the specialised trade press. These announcements contain the amount of increase and the date of implementation, which is generally similar for all announcing companies” It continued that “the Commission has concerns that this practice may allow the companies to signal future price intentions to each other and may harm competition and customers by raising prices on the market for container liner shipping transport services on routes to and from Europe.”

The container shipping sector has long suffered from allegations around the issue of price fixing. The concept of the shipping conference was more-or-less abolished as a result of it and these allegations appear to go over some of the same ground. In this case the use of the phrase “allow the companies to signal future price intentions” is important as it suggests that carriers are communicating information about pricing. The difficulty is that this is done in public not in private.

The problem for the shipping lines is the uncertainty that the investigation could create. The fines levied on freight forwarders and airlines for their price-fixing misdemeanours ran into hundreds of millions of either US dollars or Euros. Such payments would be worse than inconvenient for a sector that is neither very profitable nor financially stable.