Nessun titolo diapositiva

1
Liner Shipping, Conference agreements and
Antitrust
Dr. Marco Benacchio Autorità Garante della
Concorrenza e del Mercato Direzione Trasporti e
Industria Manifatturiera marco.benacchio_at_agcm.it w
ww.agcm.it
Course in Maritime and Port Economics Genoa, 17
May 2004
2
Summary
1) LINER SHIPPING AND PRICING 2) CONFERENCE
PRICE FIXING 3) EU COMPETITION RULES AND
CONFERENCE AGREEMENTS 5) REGULATION 4056/86 (THE
BLOCK EXEMPTION) 6) CASES DECISIONS 7)
CURRENT DEBATE Review of Council Regulation
4056/86
3
Containerised cargo growth
Liner shipping refers to maritime transport
services provided on a regularly scheduled basis
for routes between pre-determined ports (general
cargo carriers, specialised cargo carriers - e.g.
car carriers or refrigerated goods carriers -,
partially or fully dedicated container carriers).
9 growth p.a.
40 world maritime trade
37 world trade in general cargo
54 world trade in general cargo
4
Tot. 6.505 ships
Tot. 6.811.000 teus
5
Goals to achieve
Shippers (final users) want

• Secure frequency and reliability to their
  purposes
• Stability in space/service quality
• Stability in prices (?)

Carriers want

• Long run profitability

6
Pricing problems traditional theory

• High lumpy capital costs (fixed costs)
• economies of scale
• market driven competition
• chronic and necessary overcapacity
• uneven demand seasonal and directional trade
  imbalances

• Marginal cost pricing below average costs is
  inefficient in the long run
• Average cost pricing
• Price discrimination
• Charge what the traffic will bear

7
Liner Pricing Marginal Cost Pricing vs. Average
Costs
Cost of Chartering another ship or hiring slots
on another vessel
8
Liner Pricing Single Carrier with Prixe Fixing
9
Liner Pricing Conference Price Fixing
Not all carriers are equal.
per TEU
D1
Av. cost/TEU

• With the Conference fixed rate PC
• carrier 1 recovers average costs
• carrier 2 operates with surplus (PC-AC2)
• carrier 2 operates with surplus (PC-AC3)

PC
Conference Fixed Rate
AC1
Marginal cost 1400 per TEU
AC2
AC3
3500
4500 (ship full)
10
EU Competition Policy and the Treaty of Rome
Article 81 of the EC Treaty (ex Article 85) 1.
The following shall be prohibited as incompatible
with the common market all agreements between
undertakings, which may affect trade between
Member States and which have as their object or
effect the prevention, restriction or distortion
of competition within the common market, and in
particular those which (a) directly or
indirectly fix purchase or selling prices or any
other trading conditions (b) limit or control
production, markets, technical development, or
investment (c) share markets or sources of
supply (d) apply dissimilar conditions to
equivalent transactions with other trading
parties, thereby placing them at a competitive
disadvantage (e) make the conclusion of
contracts subject to acceptance by the other
parties of supplementary obligations which, by
their nature or according to commercial usage,
have no connection with the subject of such
contracts.
11
EU Competition Policy and the Treaty of Rome
Article 81 of the EC Treaty (ex Article 85)
2. Any agreements or decisions prohibited
pursuant to this Article shall be automatically
void. 3. The provisions of paragraph 1 may,
however, be declared inapplicable in the case of
- any agreement or category of agreements
between undertakings - any concerted
practice or category of concerted practices,
which contributes to improving the production or
distribution of goods or to promoting technical
or economic progress, while allowing consumers a
fair share of the resulting benefit, and which
does not (a) impose on the undertakings
concerned restrictions which are not
indispensable to the attainment of these
objectives (b) afford such undertakings the
possibility of eliminating competition in respect
of a substantial part of the products in
question.
12
EU Competition Policy and the Treaty of Rome
ART. 81(1) prohibits agreements between firms
which may affect trade between the Member
States and which have as their object or effect
the prevention, restriction or distortion of
competition within the common market
BUT
ART. 81(3) exempts those agreements which
contribute to improving production or
distribution of goods, promoting technical and
economic progress . ANTITRUST EXEMPTION
13
EU Competition Policy and the Treaty of Rome
Article 82 of the EC Treaty (ex Article 86) Any
abuse by one or more undertakings of a dominant
position within the common market or in a
substantial part of it shall be prohibited as
incompatible with the common market insofar as it
may affect trade between Member States. Such
abuse may, in particular, consist in (a)
directly or indirectly imposing unfair purchase
or selling prices or other unfair trading
conditions (b) limiting production, markets or
technical development to the prejudice of
consumers (c) applying dissimilar conditions to
equivalent transactions with other trading
parties, by placing them at a competitive
disadvantage (d) making the conclusion of
contracts subject to acceptance by the other
parties of supplementary obligations which ,
have no connection with the subject of such
contracts.
14
EU Competition Policy and liner shipping

• Conferences, operating mainly as a price fixing
  cartel and supply regulation agreement, are
  deeply involved in application of article 81
• When Conferences have a dominant position within
  the relevant market (e.g. a trade such as the
  North Europe US East Cost), also article 82 can
  be applied
• How to evaluate and apply principles stated in
  art. 81 (13) and 82 to the industry of liner
  shipping?
• To what extent take in consideration the
  uniqueness of liner shipping?

15
Should liner shipping be considered as a unique
industry, out of competition rules?

• High fixed costs
• inelastic and lumpy supply
• Low returns on investment
• inelastic demand
• market driven competition gt below average cost
  pricing?
• high risk of excess of capacity
• asymmetries in demand seasonal and directional
  trade imbalances
• no or little regulatory barriers
• Investment in innovation

• benefits for shippers (social benefits) when
• freight rates are stable
• services provided are reliable and adequate

WHILE
16
Which arguments do carriers/academics use to put
forward the inherent instability of LS and
defend conference agreements?

• 1) the idea of Destructive competition
• Since LS has considerably fixed but unavoidable
  costs the existence of excess or reserve of
  capacity gives rise to short run price
  competition that does not cover total costs.
• As a result carriers either move their vessels
  to other trades or go bankrupt.
• Since this could lead to a a shortage in
  capacity, price may rise considerably drawing in
  new capacity or operators in the market.
• Finally, capacity would increase to the original
  (adequate) level of excess or reserve of capacity
  to ensure a reliable service, which then would
  trigger a new cycle of destructive competition
  which renders regular scheduled services
  impossible.
• Thus market failure occurs

17
Which arguments do carriers/academics use to put
forward the inherent instability of LS and
defend conference agreements?

• 2) the theory of contestable market
• Since LS is a contestable market (absence of
  barriers to entry/exit), the actual number of
  suppliers for each trade is irrelevant for market
  performance due to potential competition
  (hit-and-run entry).
• A contestable market, even a contestable
  monopoly, will provide a price-output combination
  close to the model of perfect competition

• 2) the core theory
• there might be a risk that the liner shipping
  market may not have a competition equilibrium
  under certain supply/demand constellations
• liner companies may be too small and have
  unnecessary high costs
• to ensure that there is an efficient large
  amount of capacity, the industry must operate
  with excess of capacity unprofitable under
  perfect competition

18
EU Competition Policy and liner shipping

• Historically there has never been consensus as
  to leave liner shipping to a destructive
  competition
• EU member states have traditionally
  tolerated/encouraged forms of cooperation in
  liner shipping

• 1) CONFERENCE AGREEMENTS
• CAPACITY CONTROL
• RATE FIXING
• TO ENSURE STABLE INTERNATIONAL SHIPPING SERVICES
• 2) CONSORTIA/ALLIANCES
• TECHNICAL, OPERATIONAL OR COMMERCIAL ARRANGEMENTS
  FOR SUPPLYING JOINTLY ORGANIZED SERVICES (SINGLE
  ROUTE / GLOBAL BASIS)

19
1979 the council regulation 954/79 (Brussels
Package) authorized Member States to ratify the
UNCTAD 1974 code for conduct for Liner Shipping

• Main elements
• (open) Conference were recognized for their
  positive function
• It is the nationality of the carrier who runs
  the service that matters not the ships flag
• measures for stabilization of freight rates
  (unconditional acceptance of price fixing
  cartels)
• 404020 rule
• anti-competitive moves discriminating outsiders
  were banned (e.g. fighting ships)

20
The UNCTAD code remains in force but it has never
had relevant impact on the shipping industry
(EU-West Africa trades)
1986 the maritime package (4 Council
Regulations 4055-4058/86)

• N 4055/86 (freedom to provide maritime services)
• LIBERALIZATION PRINCIPLE
• all international shipping services carried out
  within within the Community can be performed by
  any registered operator within EC on an equal
  basis

21

• N 4057/86 (unfair pricing practice)
• FAIR COMPETITION
• - handles the severe pricing competition
  practices from ex-Soviet bloc countries (which
  saw in the shipping business a way to earn
  Western hard currency)
• - anti-dumping provisions only ever applied
  against Hyundai

• N 4058/86 (coordinated action)
• UNCTAD CODE IMPLEMENTATION
• - designed to tackle any problems arising from
  the non-compliance of the UNCTAD rule 404020
• - counter-measures against third country actions
  that limit access by EU vessels

22
REGULATION 4056/86
SCOPE and APPLICATION - to set rules for the
application of Articles 81 and 82 of the Treaty
to maritime transport services - It shall apply
only to international maritime transport services
from/to one Community ports, other than tramp
vessels services where tramp vessel services are
defined - art 1(3)(a) - as the transport of
goods in bulk or in break-bulk in a vessel
chartered wholly or partly to one or more
shippers on the basis of a voyage or time charter
or any other form of contract for non-regularly
scheduled or non-advertised sailings where the
freight rates are freely negotiated case by case
in accordance with the conditions of Supply and
Demand - Unlimited duration - notably the only
one to exempt price fixing / no market share
thresholds
23
The BLOCK-EXEMPTION provisions (art.3)
Agreements, decisions and concerned practices of
all or part of the members of liner conferences
are exempted from the prohibitions in Art. 81(1)
and 82 of the Treaty, subject to the condition
imposed by article 4, when they have as their
objective the fixing of rates and condition of
carriage and one or more of the following
objectives - the coordination of shipping
timetables, sailing/call dates - the
determination of the frequency of sailings or
calls - the coordination or allocation of
sailings or calls among members of the
conference - the regulation of the carrying
capacity offered by each member - the allocation
of cargo or revenue among members
24

• Justification for the BLOCK-EXEMPTION
• Liner Conferences
• have a stabilizing effect, assuring shippers of
  reliable services
• contribute generally to providing adequate
  efficient scheduled maritime transport services
• whereas
• - such results cannot be obtained without the
  cooperation that shipping companies promote
  within conferences in relation to rates and
  availability of capacity or allocation of cargo
  and income (proportionality)
• - conference continue to be subject to effective
  competition mainly from non-conferenced scheduled
  services

25
In synthesis the legislator has assumed that 1)
price-fixing and supply regulation within
conferences leads to stability of freight rates
and 2) stability assures shippers of reliable
scheduled maritime transport services
How to limit the benefit of the block
exemption? The Commission and the Court agree
that the block exemption provisions of Regulation
4056/86 must be interpreted in such a way as to
fit within the parameters for exemption
established by art 81(3) of the
Treaty. Derogations from Article 81(1) must be
interpreted narrowly e.g. it does not cover the
inland on-/off-carriage of cargo supplied in
combination with other services as part of an
intermodal transport operation (e.g. cargo
handling services for which there is specific
supply and demand distinct from that of maritime
transport)
26
Logic framework of application of the block
exemption (when a conference agreement is
notified to the Commission) 0) Have the
agreements the object or effect of restricting
competition? 1) but contribute to improving the
production or distribution of goods or to
promoting technical or economic progress? 2)
while allowing users a fair share of the
resulting benefits? 3) and do not impose on the
undertakings concerned restrictions which are not
indispensable to the attainment of those
objects? 4) and does not afford such
undertakings the possibility of eliminating
competition in respect of a substantial part of
the services in questions?
FULFILLMENT OF THE 4 CUMULATIVE CONDITIONS
27
0) Have the agreements the object or effect of
restricting competition? Price fixing (horizontal
agreements having the object and not only the
effect) and limitation of production are hardcore
restrictions of competition explicitly mentioned
in article 81(1).
28

• 1) but contribute to improving the production
  or distribution of goods or to promoting
  technical or economic progress? (1/3)
• Liner conferences should contribute to
• price stability (maintenance of freight rates at
  a more or less constant level by liner
  conferences, in accordance with a set structure
  over a substantial period of time)
• Assuming that trades on which conferences
  operate are generally characterized by rate
  stability, it would still have to be shown that
  this was the result of conference rate-setting
  and not something different (for instance by an
  increase in the number of long-term individual
  contracts)
• reliable services (maintenance over time of a
  scheduled service, providing shippers with the
  guarantee of a service suited to their needs)
• Is price-fixing a necessary pre-requisite for
  the maintenance of a reliable scheduled service?

29
1) but contribute to improving the production
or distribution of goods or to promoting
technical or economic progress? (2/3) the
Commission has defined the concept of Stability
as the maintenance of freight rates at a more
or less constant level by liner conferences, in
accordance with a set structure over a
substantial period of time (Commission, TAA case
1994) In any case the Council did not
assert (and indeed could not have asserted) that
stability is more important than competition
(Court of First Instance, TAA case 2002)
30

• 1) but contribute to improving the production
  or distribution of goods or to promoting
  technical or economic progress? (3/3)
• Liner conferences thus should contribute to
• - adequate efficient scheduled maritime transport
  services
• where
• adequate refers to shippers service
  requirements
• efficient means supplying the right product at
  the right price
• does the block exemption encourages the
  maintenance of excess of capacity on the trades
  on which conferences operates?
• Do shippers fund the cost of excess of capacity
  through supra-competitive freight rates?

-
31

• 2) while allowing users a fair share of the
  resulting benefits?
• Carriers say conferences promote
• price stability
• the reduction in uncertainty about trade
  conditions
• the provision of reliable and adequate services
• the set of a maximum tariff
• Sliding scale
• the greater the restriction of competition, the
  greater must be the efficiencies pass-on to the
  consumers

32
2) while allowing users a fair share of the
resulting benefits? BUT If conference price
fixing leads to rates being set at the level
necessary to cover the average cost of the least
efficient member of the conference, the
efficient members reap benefits stemming from
rates that are above their costs, while the cost
savings and efficiency gains of these carriers
are not passed on to shippers this would be
directly contrary to the interest of transport
users
33
Liner Pricing Deviation from Conference Price
Fixing
Is this a sign of competition?
34

• 3) and do not impose on the undertakings
  concerned restrictions which are not
  indispensable to the attainment of those objects?
• Is this assumption still valid given
• - the increase in the number of individual
  services contracts(ICS)
• ICS are contracts by which a shipper undertakes
  to provide a minimum quantity of cargo
  transported by an individual carrier over a fixed
  period of time and the carrier of the conference
  commits a certain rate as well as a defined
  service level
• - the profusion of operational (non-price fixing)
  agreements
• The consortia block exemption (Regulation
  823/2000) is specifically designed to meet the
  needs of shipping lines wishing to co-operate to
  provide efficient scheduled services, benefiting
  from rationalization and economies of scale
• - the trend towards consolidation through mergers?

35
4) and does not afford such undertakings the
possibility of eliminating competition in respect
of a substantial part of the services in
questions? Does the conference have a
substantial market share? External
competition - mainly other liner shipping
services - limited for other mode of transport or
tramp (to be evaluated case by case) Internal
Competition - by the same members of the
Conference
36
Cases and Decisions

• Evaluation steps
• 81(1) prohibitions
• then, if restrictive agreements
• block exemption (Reg. 4056/86), usually
  interpreted narrowly
• if not applicable
• 81(3) general antitrust immunity
• if no compatible with art 81(3)
• agreement ban / fine

37
1) CEWAL (1992) - the 1st application of
4056/86 restrictive agreements ex 81(1) were not
exempted ex reg 4056/86 and it was recognized an
abuse of conference power (as a collective entity
holding a dominant position - art. 82) on the
trades between Europe and West Africa (use of
fighting ships to exclude a competitor from the
trade between Northern Europe and Zaire 100
loyalty rebates)

• 2) Trans-Atlantic Agreement - TAA (1994)
• the Commission found that the TAA had acted
  outside the scope of the EU liner conference
  block exemption by
• agreeing prices for inland haulage (inland price
  fixing)
• artificially freezing capacity in order to drive
  up prices (capacity management programmes)

38

• 3) Trans-Atlantic Conference Agreement TACA
• The First Match (Decision 1999/243/EC, case
  IV/35.134)
• the Commission imposed fines of 273M.Euro on the
  15 TACA parties for altering the competitive
  structure of the market
• inland price fixing
• fixing of brokerage and freight-forwarder
  remuneration
• collusion and abuse concerning the terms and
  availability of individual service contracts
  (ISC)
• anticompetitive strategic behavior towards
  independent carrier forcing them to join the TACA
  (e.g. Hanjin and Hyundai)

39

• Trans-Atlantic Conference Agreement TACA
• The Revenge (?) (Court of First Instance 30
  September 2003)
• The Court has upheld both the Commission's
  finding that the TACA infringes the competition
  rules and its refusal to grant exemption to the
  member companies
• The Court has essentially upheld the
  Commission's finding that the restrictions in
  relation to service contracts constitute an abuse
  (the first abuse), but has set aside for lack of
  evidence and infringement of the rights of
  defense that part of the decision concerning the
  measures inducing competitors to join the
  conference (the second abuse).
• the Commission had not demonstrated that the
  specific measures, rather than particular
  commercial considerations, had induced the only
  two shipping companies who joined the conference
  between 1994 and 1996 - Hanjin and Hyundai - to
  become members of the conference.

40

• Trans-Atlantic Conference Agreement TACA
• The Revenge (?) (Court of First Instance 30
  September 2003)
• The Court further held that the Commission had
  infringed the rights of the defence by using
  documents in support of its complaints without
  giving the TACA parties the opportunity to
  comment on the interpretation which the
  Commission intended to place on them.
  Consequently, since those documents were the only
  evidence of those specific measures, the Court
  found that those measures were not validly
  proved.
• The Court therefore annulled the Commission's
  decision in so far as it found that the TACA
  parties had abusively altered the structure of
  the market, together with the fines imposed in
  respect of the second abuse.

ECJ is coming
41
Last but not least

• 29/01/1999
• notification of the revised TACA
• 14/11/2002
• Commission decision on the Revised TACA
• (Case COMP/37.3962/D2 - Revised Taca)

42

• The notification of the Revised TACA (1999)
• The Parties
• 7 shipping lines (for the TACA they were
  originally 14)
• Extension (The Trade)
• east/wesbound shipping routes (scheduled
  container trade) between NorthernEU ports and
  east coast USA and Canada
• Main issues
• - Tariff rates (the Tariff)
• - Service contracts
• - not-below-cost rule for intermodal freight rates

43
The Revised TACA decision (2002) The relevant
market evaluated in the decision - product
containerized liner shipping between North-EU
and USA using the sea routes between ports in
North-EU and the ports in the USA and Canada -
geographic the area where these services are
marketed, i.e. the catchment area of the North-EU
ports Mediterranean ports have been considered
not substitute Land transport services which
shippers acquire as a part of a multimodal
transport operation for the carriage of
containerized cargo between North-EU and USA
dont fall under Reg. 4056/86 and are dealt under
a separate procedure (e.g. regulation No 1017/68).
44
The Revised TACA decision (2002) The structure
of the market
1) More External Competition (alliances /
independent)
45
The Revised TACA decision (2002) Application of
the block exemption to Restrictions that have
been recognized liable to have an appreciable
effect on trade between Member States -
price-fixing for liner services tariffs
(provide commercial stability) - regulation of
the carrying capacity offered by each of the
members (capacity arrangements have involved the
withdrawal of vessels and have resulted in
significant cost savings) always provided that
the Parties shall not increase any tariff rates
in conjunction with any capacity regulation
program on any trade covered by such program or
create an artificial peak season
46
The Revised TACA decision (2002) Intermodal
freight rates the not-below-cost rule
(application of exemption ex Reg. No 1017/68) -
the Parties are not authorized to agree prices
with each other for inland transport services
supplied to shippers as part of a multimodal
transport operation for the carriage of
containerized cargo in the Trade - the
Parties are authorized to agree that no member
may charge a price less than the direct
out-of-pocket cost incurred by it for inland
transport services supplied in combination with
those maritime transport services
(not-below-cost-rule)
47
The Revised TACA decision (2002) Provisions not
covered by the block exemption - service
contracts Individual exemption (antitrust
immunity) ex art 81(3)

• TACA
• The Parties agreed terms and conditions under
  which they might enter into service contracts
  with shippers
• placed restriction on the availability and
  contents of these contracts (mainly individual
  service contracts - ICS)

• Revised TACA
• The availability of ICS is not restricted (and
  indeed they constitute the preferred form of
  arrangement on the trade covered by the Revised
  TACA)
• more internal competition (Up to 90 of cargo
  is transported through ICS)

48
The Revised TACA decision (2002) In
conclusion Pursuant to Art. 81(3) the
provisions of Art. 81(1) of the Treaty are
declared inapplicable to those aspects of the
Revised TACA falling within the scope of Reg. No
4056/86 and Reg. No 1017/68, for a period of six
years from May 1999
49
Some problems arise 1) Conferences vs.
alliances Since Conferences price fixing and
limitation of production are hardcore
restrictions of competition, is price-fixing a
necessary pre-requisite for the maintenance of a
reliable scheduled service? Consortia/alliances
could be as well effective and less
restrictive? 2) Efficient fleet sizing does the
block exemption encourages the maintenance of
excess of capacity? Do shippers fund the cost of
excess of capacity through supra-competitive
freight rates? 3) transfer of a fair share of the
resulting benefits to users If rates are set at
the level necessary to cover the average cost of
the least efficient member of the conference, the
efficient members reap benefits, while the cost
savings and efficiency gains of these carriers
are not passed on to shippers
50

• 4) eliminating competition in respect of a
  substantial part of the markets?
• How long External and Internal competition is
  effective to force Conferences to efficiency?
• 5) Market definition
• the need for re-assessing analysis of liner
  shipping markets
• - trade-by-trade basis (each trade is a relevant
  market)?
• additional product (port services, logistics and
  inland carriage)
• geographic market definition (port competition)?

51

• 6) Mergers
• - mergers between members and non members may
  strengthen the dominant position for the
  conference / alliance
• - mergers between members of the same
  conference/alliance could lead to a reduction in
  competition between its members and a increasing
  singleness of purpose and conduct of the market
• 7) Alliances
• - positive attitude towards alliances/consortia
  (purposes otherwise achieved through mergers)
• alliance within a conference concern for
  super-imposing of price-fixing activity
  (Conference) on co-ordination of shipping
  operations and joint marketing (Alliance)
• REG 823/2000 In order to qualify for the
  exemption, a consortium must possess on each
  market upon which it operates a market share of
  under 30 when it operates within a conference,
  and under 35 when it operates outside a
  conference.

52
Are benefits from exemptions and immunities
related to liner shipping still greater than
costs?
Anti-trust block exemptions
Do the arrangment restrict competition?
no
yes
Do benefits to the community outweigh the costs?
yes
no
Clearly demonstrate that benefits exceed costs
Clearly demonstrate that they are not restrictive
Can the objective of legislation be met by better
means?
yes
no
Remove restrictions
Device alternative approach
Retain existing approach
53
Current EU debate Is Reg. 4056/86 still
rationale?
http//europa.eu.int/comm/competition/antitrust/ot
hers/maritime

• Since Reg. 4056/86 was adopted 18 years ago, is
  the justification for price fixing and supply
  regulation by liner conferences still valid in
  the light of the present market conditions?
• are the conditions for the block exemption
• Stability
• Reliability
• adequate efficient scheduled maritime transport
  services
• benefits to transport users
• proportionality
• indispensability
• still fulfilled?
• see also OECD Competition Policy in Liner
  Shipping DSTI/DOT(2002)2

54
Review of Council Regulation (EEC) Nov 4056/86

• Informally started on 25 March 2002, three-step
  approach
• fact finding
• Green or White paper by the Commission (foreseen
  for Autumn)
• legislative proposal (maintaining / Repealing /
  Amending)
• the first phase of the Review was launched on 27
  March 2003, with the publication of a
  Consultation Paper
• In reaction the Commission services received 36
  submissions carriers (8), shippers (5), freight
  forwarders (5), Member States (14), consumer
  association (1), others (3)
• Public Hearing Review of Council Regulation
  4056/86 governing maritime transport - 4 December
  2003

55

• Some hot issues
• to what extent is price fixing the best option
  for efficient liner markets?
• Whats the value of stability for shippers?
• Other forms of co-operation are complementary or
  substitute of conferences?
• a more competitive environment through the
  removal of the anti-trust exemption will increase
  market concentration?
• A leap in the dark as carriers say?
• if conference power is waning, why retain block
  exemption for price fixing at all?
• The Commission does not recognise the
  destruction competition theory, the core
  theory and the perfect contestability of the
  liner shipping market

56

• Main arguments of the supporters (carriers)
• liner shipping industry is special
• conferences promote efficiencies
• Market circumstances do not make change
  necessary
• There are no alternatives
• Main arguments of the opponents (shippers)
• Competition can only be better
• shippers are willing to take the risk of
  unfettered competition
• A price fixing cartel gives stability by
  definition. But a stability without being
  transparently cost oriented is a value for the
  consumer?

57

• Efficiencies
• Reg. 4056/86 assumes that conferences bring
  stability of prices, assuring reliable, adequate
  and efficient scheduled services (recital 8)
• How to verify whether there is factual evidence
  for (1) price stability and (2) the casual link
  between price stability and reliable services?
• Stability data on rate stability seems to be
  not conclusive
• which price? Published vs. actual rates, with or
  without surcharge
• Casuality reliable services without block
  exemption?
• conferences set common and uniform freight rates
  but they do not provide the joint operation of
  liner shipping services (the members of
  conferences do so)