EC has failed to solve price fixing problem, shippers say

EC has failed to solve price fixing problem, shippers say

The European Commission (EC) has failed to tackle the problem of price fixing among carriers because it has not made its agreement with container lines legally binding, the European Shippers Council (ESC) has said.

Last week, the EC closed its formal investigation into 15 major container shipping lines, concluding there is no evidence the carriers have infringed EU competition law.

The investigation looked at whether lines had illegally colluded in hiking prices through public general rate increase (GRI) announcements on their websites and in the trade press since 2009.

The EC has accepted the 15 carriers’ collective offer to change the way they make price announcements to customers, including the way GRIs are announced.

But the ESC said these new measures will not be effective. “Although this new model brings some more transparency to the maritime transport of containers price politics, it does not solve price fixing problem. Indeed, the liner operator practice of announcing GRIs may have harmed competition and shipper’s interests,” the ESC said today.

The carriers have said they will stop using GRIs, but will announce freight rates that include at least the five main elements of the total price: the base rate, bunker surcharges, security surcharges, terminal handling charges and peak season surcharges.

Price announcements will be considered as maximum prices for the declared period of validity and will not be made more than 31 days before their entry into force, the carriers have said.

“During the consultation period after commitments were made public, shippers, through their European organisation the ESC, have voiced their concerns and request the Commission to refuse these commitments,” the ESC said in a statement.

“The new model may allow the parties to explore each other’s pricing intentions and to coordinate their behaviour. Compared to the previous practice of publishing GRIs, the new model still enables the liner operators to test their new price policy without incurring the risk of losing customers,” the ESC said.

Announcements can still be used as a tool for liner companies to collude on pricing, which could cause small to medium-sized enterprises (SMEs) to be priced out of the market, the council said.

The ESC intends to keep pushing for an in-depth review of the competition rules applied to container shipping.

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.

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