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Rodyk & Davidson LLP
SEPTEMBER 2010  

STARBOARD

Maritime News 

Antitrust Exemptions To Continue For Liner Shipping Agreements?

The Competition Commission of Singapore (CCS) has proposed an extension of the current block exemption order for liner shipping agreements, expiring on 31st December 2010, for another five years till 31st December 2015.

At present, cooperation between carriers and liner operators when providing liner shipping services are exempt from section 34 of the Competition Act. This section prohibits concerted practices that appreciably prevent, restrict or distort competition in Singapore.

In the consultation paper (which can be read here ) to the Minister for Trade and Industry, the CCS noted that, apart from the European Union, antitrust exemptions remain the regulatory norm for the global liner industry. The CCS took into account the recent global economic downturn as well as the large benefits to Singapore’s economy from liner shipping operations. The CCS also noted that there are "other routes" through Singapore which will not be affected by EU regulatory developments. Accordingly, the CCS believes that the EU’s recent repeal of its block exemption should be first studied rather than followed.

The CCS has invited feedback on its consultation paper, by 4th October 2010. Some comments have already been made by vessel owners and shippers’ associations.

The Singapore Shipowners Association expressed support for the proposed extension, with Neptune Orient Lines and Orient Overseas Container Line both citing the importance of collaboration and sharing information to ensure stability.

However, the Asian Shippers’ Council (ASC) attributed the extension to the substantial influence of liners in Singapore, calling it "unthinkable" and an "abuse of shippers". If the United States ends antitrust immunity for carriers, which is currently being considered, Asia will be only major trading bloc to protect shipping conferences and rate discussion agreements and the ASC believes this will affect Asian exporting economies the most.

The ASC has been historically opposed to the block exemption order. In April 2006, when the block exemption order was first proposed, both the ASC and the Singapore National Shippers Council (SNSC, also the founding member of the ASC) described the block exemption order as:-

  1. unnecessarily generous to liner shipping agreements;

  2. out of sync with Singapore and the free trade policy it espouses; and

  3. compromising the economic benefits accrued to Singapore, a trade dependent country.

The SNSC further compared the block exemption order with "cartel practices" of other liner shipping agreements such as Far Eastern Freight Conference and the Straits/New York Conference (SNYCON) to "dictate terms and conditions for the carriage of goods."

We shall keep readers updated on the progress of this proposal.


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Maritime

Rodyk's Maritime Practice provides a broad range of services in the area of maritime law. The team comprises lawyers with extensive experience and a deep understanding of the maritime industry. Our services span the whole value chain from the inception and structuring of projects to enforcement and dispute resolution. Read more