COMPETITION LAW ANALYSIS
(Report by Australia)

Summary

About two-thirds of member economies have implemented general competition or anti-trust laws, but most of these economies treat the international liner cargo shipping industry as a special case.

In some cases that special treatment involves simply not applying the general competition law to such shipping, but more commonly involves a special competition regime for international liner cargo shipping.

Competition or anti-trust law is not a current issue for other international shipping markets, as these operate in global free markets characterised by intense competition and rapid response to the forces of supply and demand. Also, domestic shipping, which is characterised by varying degrees of cabotage protection for national shipping, appears to be beyond the intended scope of this exercise.

Question item 12 (a): outline of competition or anti-trust laws in general

From members’ responses, it appears that 10 of the 16 responding economies (63%) have implemented general anti-trust laws: Australia, Canada, Japan, Korea, Mexico, New Zealand, Peru, Chinese Taipei, Thailand and the United States.

From the available information, while the details of these general competition laws differ widely from economy to economy, the basic intent is similar. These laws are designed to enhance economic efficiency by promoting competition.

Various types of conduct that limit competition are made illegal, including: price fixing; unduly discriminatory pricing; misuse of market power; bid rigging; making customers deal with a nominated third party; takeovers and mergers likely to reduce competition; predatory acts designed to achieve or maintain monopoly power; and various other monopolistic or market rigging practices.

These anti-trust laws also sometimes include price regulation and consumer protection provisions.

Offences may be civil or criminal, and sanctions include fines, prohibition orders, court orders for remedial action, and for serious and wilful violations, prison sentences (in one case of up to 7 years).

Question item 12 (b): scope of application of competition or anti-trust laws and regulations to the maritime transport sector

Of the 10 responding economies having general competition or anti-trust laws, it appears that 8 treat the international liner cargo shipping industry as a special case: Australia, Canada, Japan, Korea, New Zealand, Chinese Taipei, Thailand and the United States.

Of these economies, 6 have special competition laws for international liner shipping: Australia, Canada, Japan, Korea, New Zealand, and the United States.

Chinese Taipei and Thailand, on the other hand, do not appear to have specialised regimes for liner shipping. However, Chinese Taipei follows general international practices in regulating shipping. Thailand has not declared shipping to be a controlled industry under its anti-monopoly law.

For Mexico and Peru, it appears that their general domestic competition laws may apply to international liner shipping as it does for their domestic industries.

Liner shipping competition regimes are intended to benefit exporters and importers by providing exemptions from general competition law in order to facilitate the provision of stable, efficient and high quality joint services under conference agreements and other forms of collaboration, avoiding destructive competition. At the same time, the regimes commonly ensure that shippers have countervailing powers of various sorts in order to strengthen their position in their dealings with carrier groups.

These countervailing powers (or carrier group obligations) in the different special regimes vary, but may include shipper or shipper group rights:

• to collaborate as shipper groups in their dealings with carrier groups;
• to have access to copies of conference agreements and other forms of liner collaborative agreement, such as discussion agreements, slot exchange agreements, consortia agreements etcetera;
• to have access to published or officially filed freight rate information
• to negotiate service levels with carrier groups;
• to negotiate shipping arrangements, including freight rates and surcharges, and service contracts, with carrier groups;
• to be provided with information by with carrier groups, including data on costs of providing services, that is relevant to such negotiations;
• to request official mediation to assist in the settlement of disputes; and
• to request an investigation by competition regulators when disputes cannot be resolved.

Periodic review and modification of special shipping regimes may be needed to ensure that national interests are not jeopardised and that regimes deal adequately with ongoing developments in shipping. For example, the Ocean Shipping Reform Act of 1998 modified the United States regime based on the Shipping Act of 1984.

This page was last updated on 1 Feb, 2008