New EU regulation on the application of the articles 85 and 86 of the Treaty
as regards of the Maritime Transport Tramp Services
Competency and Pools
Dr. Jaime Rodrigo de Larrucea
Maritime Law Lecturer (UPC)
President of Maritime Law Comitee of Barcelona BAR Association
State of the Art
To bring Tramp Vessel Services within the scope of the general rules of EU Competition Laws
(Council Regulation 4050/86, articles 81 and 82, and Council Regulation 1/2003) we have to
analyze the different forms of cooperation among the carriers in the Tramp Markets with special
consideration to Pool Agreements.
Recently the Council Regulation (EC) No 1419/2006 of 25 September 2006 repealing
Regulation (EEC) No 4056/86 laying down detailed rules for the application of Articles 85 and
86 of the Treaty to maritime transport, and amending Regulation (EC) No 1/2003 as regards the
extension of its scope to include cabotage and international tramp services (Text with EEA
relevance) The porpoise of this study is the deep analysis of the pools and it adaptation to the
Communitarian regulations.
3.2.-Detailed Market Information on co-operation and other arrangements in Tramp Shipping
a) Description of the Different arrangements.
There are different contracts or arrangements among the different maritime operators. We
make an initial study distinction of three points, as follows:
1.- POOL
A.- Definition
There are two definitions of Pool that are quite accurate to establish an initial study of the pool
agreement:
1.- MURRAY, 1994:"...joint ventures between shipowners to pool vessels of similar types, with
central administration, which are marketed as a single entity, negotiating voyage/time
1
charterparties and contracts of affreightment, where the revenues are pooled and distributed to
owners..."
2.- PACKARD (1989): "...a pool is a collection of similar vessel types under various ownerships,
placed under the care of an Administration. This Administration markets the vessels as a single,
cohesive unit and collects the earnings which, in due course, are distributed to individual
owners under a pre-arranged weighing system by which each entered vessel should receive its
fair share...."
B.- Characteristics
(i) Similar tonnage
(ii) Central administration (Pool Management Company)
(iii) Joint marketing
(iv) Negotiation of freight rates
(v) Centralization of voyage costs
(vi) Freight collection
(vii) Weighing system
(viii) Revenue distribution
(ix) Fair share.
2.- FREIGHT CONFERENCE
A freight conference as it was initially defined by the UNCTAD is a group of two or more
Shippers operating in regular lines with the aim of ship merchants on determined line or
lines, within specific geographical boundaries, and with agreements (whatever its nature is)
that rules a context where the freights are uniform or common to them. That definition could
help to understand the conferences. The reason that definition is not very precise is the aim
of the UNCTAD to include all the different situations that with another name given operate
under equal principles.
Obviously that initial definition has to be extended to the Tramp Shipping Services, as it is
not only applicable to the liner services.
Therefore the definition we are going to use to start working could be the following: Juridical
entities that consists on a meeting of various ship operators, even joined on pools, whatever
2
flag they have got, to defend their interests. The conferences can be opened or closed
depending on the availability to be joined by others.
3.- DIFFERENT CONTRACTS OF AFFREIGHTMENT
The volume contract and the tonnage contract tare two different kind of agreements in
which a shipper agrees to carry a number of tons during a determined period of time. This
transport agreement is based on a prefixed freight.
Those contracts are named “contracts of Affreightment” (COA’s). (See GORTON L., IHRE,
R: PRACTICAL GUIDE TO CONTRACTS OF AFFREIGHTMENT AND HYBRID
CONTRACTS, 2nd Edition , January 1990 ) .
The notion of volume contracts, which provide for the carriage of a specified quantity of
cargo in a series of shipments during an agreed period of time, is well established in the dry
bulk and oil trades, where they are often described as contracts of affreightment (CoAs) or
tonnage contacts. They are commonly used, for example, by FOB buyers under a long term
sales contract who wish to secure their tonnage requirements and manage the freight risk.
BIMCO issued a standard volume contract of affreightment for the transportation of bulk dry
cargoes, codenamed VOLCOA, in 1982 (Revised and reissued in November 2004 as the
standard contract of affreightment for dry bulk cargoes code named GENCOA), which
reflects the terms commonly used in the trade. This form provides for an agreed period of
the contract, the total quantity to be shipped and the quantity per shipment. It also provides
that each and every voyage there under shall be governed by the terms and conditions of a
voyage charterparty as per an attached proforma. INTERTANKO issued a standard form
tanker contract of affreightment, INTERCOA 80, in 1980 (which is adopted by BIMCO). This
form provides for an agreed contractual period, the quantity to be shipped per year and a
quantity per shipment. Each voyage is to be performed subject to the terms of a
charterparty on the INTERTANKVOY 76 form. Volume contracts which contain provisions
similar to those reflected in the VOLCOA and INTERCOA forms are outside the scope of
the Hague Rules, the Hague-Visby Rules and the Hamburg Rules. They are, therefore, not
currently subject to an international mandatory regime.
The Space/Slot Charter was issued by the BIMCO as a standard document in 1993. It was
called SLOTHIRE. This kind of agreement was in use even before it was issued by that
organism, and its objective is the hire of a part of the vessel( a deck could be an example),
or a certain capacity measured in Slots, superficies, volume, Liner meters. The
3
spacecharter it is used in regular liner shipping as a supplement to liner vessels. Although
this is not its only use, it is also used in other ship services. As an example it is used on the
forest shippers. If an industrial company has got vessels under timer charter agreements
and has not enough cargo to full the ship they can agree with a forwarding agent the hire of
the remaining capacity (freight for space), acting as owner disposal in front of the owners of
the Cargo.
We cannot forget the Trip Charter and the Consecutive Voyage Charter (CVC). The first
one Consist on a charter agreement to do consecutive trips. It means a fixed number of
voyages in a fixed route. The second one is an agreement where the ship-owner hires the
vessel for the trips that can be done within a fixed period of time. The Charter parties type
are SHELLCONSEC, INTERCONSEC for tankers.
The parties in these kinds of agreements could be the shippers, the ship-owners,
forwarding agents, etc.
Another kind of arrangements
Stabilization Agreements
This kind of structure is the one most similar to the Conference, although this one has no
decision making and ruling capacity. These kinds of agreements has taken over the
conferences which disappeared because of the OSRA. Agreements such as the
Transpacific Stabilization Agreement (TSA) o el Westbound Transpacific Stabilization
Agreement (WTSA) have been existed from the beginning of the 90’s; it is the new context
the one that make it applicable again.
In its origin those agreements were signed by conferences and independent ship-owners to
stop the overcapacity of the Transpacific Route, taking back part of the remaining slots.
That armistice between sectors traditionally confronted is possible when the freight market
is much deteriorated, risking the bankruptcy of all the operators involved.
These stability agreements are blamed quite often of being conferences arrangements in
the dark. In May 1999 the TCA recommended to increase the freights to 900-1000 USD per
TEU. Taking into consideration the freight increase in the market, certainly that
recommendation was followed by most of the ship-owners. In the first term of 1999 the
freights Asia-USA were about 1619 USD and in the second term 2018 USD per TEU.
4
The different Legislations does not like to be benevolent with these structures as with the
conferences and the Competition Law EU which do not exempted them from anti trust laws.
Slot Charter Agreements
This type of cooperation was thought for moll and initially applied to transpacific rules.
Through this agreement one operator that does not dispose ships in one service hire space
to other operator which has vessel in that route. The operator, even without ships in
service, will commercialise and will issue its own bills of lading. In return he will pay the
price agreed as charter to the authentic operator of the ship for the space used and the
operational costs.
Vessel Sharing Agreement (VSA)
The key features of this kind of agreement are: Independent commercial management;
individual issuing of bills of lading from each shipping company; agreement among the shipowners to establish the routes; individual ship contributions; vessels shared utilization; the
commercial trade mark of the participants is maintained; the agreement comprehends only
one specific kind of traffic.
It is quite important to remark that the expertises doctrine does not agree at the time of
distinguishing those figures when they have to identify these kinds of agreements. In
different bibliography we can find this type of agreement named as Joint Service, Alliances,
Consortium, etc.
b) Structure of the arrangements and Pools
The structure of the pools is a clarifying start point. This structure is to be studied from the
one content in the following table:
5
Source: HARALAMBIDES, H.E. (1996) THE ECONOMICS OF BULK SHIPPING POOLS
c) Main objectives of the different associational structures
Although each kind of structure above mentioned has its own objectives we can establish that
the main objectives to start the work are the normalization of the freights and the non abusive
competition done by markets that could endanger the continuation of the occidental countries
fleets. The second objective is the optimization of the vessels used in the cargoes.
d) Internal regulation of the structures
The regulation is different to any different structure. Therefore a detailed study of the different
internal structures would enable us to define each internal structure and its regulations.
Although, the structures operate together, and in the same markets they obey to different needs
and its regulations are different even in the liability field.
The internal regulations should comprehend the study of the relations held among the members
and their liability in front of the customers being consumers or not.
6
e) Internal structure and working
We can use the following table to understand the structure of that market:
3.3 Combining market information with information on co-operation
arrangements in tramp shipping
In order to fulfil the requirements of that point (especially to fill the table included) we provided
several information, to be completed more exhaustively, regarding the arrangements and cooperations arrangements in different tramp shipping markets.
The following tables give an example of the increase of the fleets operating in pools (bulk, chemical,
oil, forestry etc…) and revenues.
In addition we have also included tables giving examples of pools and alliances. Obviously the work
shall be developed with further investigations and information.
7
8
9
Forest Products Carrier Fleet Ownership Profile
Crude Oil Tanker Fleet Ownership Profile
10
Oil Products Tanker Fleet Ownership Profile
Chemical Tanker Fleet Ownership Profile
11
Reefer Fleet Ownership Profile
Principal pools in the sector of Oil and Chemistry
Ships
(position
ing)
14
ships>
100 000
unit
tpl
(internati
onal)
Pools
Partners
Secto
rs
LR2
AP Moller
+
Oldendorff
+Primorosk
+Torm
petrol
eum
produ
cts
Tankers
Internat
ional
LLC
(gang
of the
6)
AP Moller
+Euronav
+Frontline/
Osprey
+OSC
+Oldendorff
the
crude
oil
42
VLCCs
(internati
onal)
Heidmar +
Pleiades
the
crude
oil &
petrol
eum
20
Panamax
(Central
America
Of the
Heidma
rPleiade
s
12
produ
cts
Stolt
Nielsen
+ Botany
Bay
Parcel
Tankers
Chempool
South
and
North)
chem
istry
Novamar
+ United
Chemical
Tankers
chem
istry
35 ships
of 3 300
to 14 000
Tpl
(Europe)
Vopak
+
Esseberger
chem
istry
24 ships
(Europe)
Source: ISEMAR – May 2001 BULK SHIPPING COMPANIES: TRENDS AND EVOLUTION.
Tankers Pools, 2002
Pool Name
Type
Odfjell
Seachen
Handy
Tankers
Dorado
Tankers
Team
Tankers
Torm / PCL
Pool
Star Tankers
Teekay OBO
Torm
Waterfront
Tkrs
The LR2
Pool
PVD/OSG
Chem/Pr
ods
Handy
Alliance
Tankers
International
Size
Range
000dwt
23-45
Age
Range
years
1-26
Number
Mn DWT
Fleet
% Fleet
60
2.08
Mn DWT
4.63
44.9
27-38
1-16
26
0.88
13.89
6.3
Handy
30-48
3-20
8
0.33
26.62
1.2
Chem/Pr
ods
Prods
40-48
2-21
10
0.44
12.72
3.5
45-51
1-17
19
0.88
13.1
6.7
Panamax
OBO
Aframax
/Prods
54-72
75-82
68-84
2-23
19-21
12-17
38
13
20
2.39
1.02
1.65
10.23
14.2
52.31
23.4
7.2
3.2
Aframax
/Prods
Aframax
/Prods
Suez
Max
VLCC
85-110
2-14
14
1.36
52.31
2.6
81-113
0-22
20
1.98
52.31
3.8
142-169
2-11
39
5.92
37.86
15.6
284-311
0-10
56
16.68
126.53
13.2
Source: E. A Gibson Tanker Book 2002, pp.135-143
13
Composition of Tankers International Pool, January 2002
000 DWT
% Share
Frontline
Moller
Overseas
Dr Peters
Euronav
Oldendorf
6631.034
2873.775
2714.065
2035.663
1824.55
601.82
39.8
17.2
16.3
12.2
10.9
3.6
Total
16680.877
100.0
Source: Calculated from E A Gibson Tankerbook 2002
Pool Data Sample Observations
Pool
data
Alliance Pool
Routes
<175,000 BS Outbound
WA USC/CAR/USG
UKCUS
AG/Outbound
01/07/2000 01/01/2001 01/07/2001
31/12/2000 30/06/2001 31/12/2001
6
15
12
9
12
6
4
6
3
2
11
17
Tankers International Pool
>175,000 WA USC/CAR/USG
AG/JAK
AG/USG
Ag West
AG East
(IND
SPORE/Korea/JAPAN)
Total
01/01/2002Obs
30/06/2002
18
5
9
25
51
32
22
55
0
4
0
8
8
5
4
2
5
4
9
1
16
23
11
5
10
6
14
35
210
Source: Derived from E A Gibsons Ltd Database
T-Statistic Values for aggregate data for Pool vessels
Pool/Routes
Alliance Pool
BS Outbound
WA USC/CAR/USG
UKC/USAC/CAR/USG
UKC Outbound
AG/Outbound
N
Pool Obs
53
39
23
41
65
T-Statistic
51
31
20
24
55
0.089
0.330
0.187
0.229
0.030
14
Tankers International
WA Outbound
WA USC/CAR/USG/USE
AG JAK
AG USG
AG Outbound
66
27
49
24
236
45
18
23
11
117
0.128
0.363
0.013
0.024
0.247
Source: D R Glen & B T Martin “Do Tanker Pools influence Market Rates? The Case of Tankers International”
Typology of ships according to the markets equipment capacity
Neo-vracs
ships of:
banks
new vehicles
heavy parcels
alive animals
cooled products
Weighty Vracs
conveying ship
tankers and
of:
bulk carriers
chemicals
bitume/asphaite
concentrated
orange
juice
ore tanker
methane tanker
nominal name
according to equipment
handysize/max
panamax
aframax
capesize
suezmax
VLCC
VLOC
ULCC
Generic name
according to
size
Source: ISEMAR: “THE MARITIME TRANSPORT OF GOODS IN BULK” Editions Moreaux – Paris 2001
The Market Segmentation of the Transport of LPG in Europe
armaments
Exmar
classes of
ships in m3
70.000 and
more
20 to 45.000
AP Moller
15 to 20.000
Bergesen
branches of
industry
International
International &
Regional
Regional
15
In Veder
1.500
Coastal Traffic
Source: ISEMAR: “THE MARITIME TRANSPORT OF GOODS IN BULK” Editions Moreaux – Paris 2001
Examples of regular links between ship-owners and shippers metallurgy / iron and
steel industry for the prevision of coal and iron ore
Shipowner
Cobelfret
Bocimar NV
Shippers
Sambre Cockerill
Sidmar Arbed
Hoogovens
Cetrgpa
Coeclerici
P&O Bulk
Usinor – Sacilor
KP Ilva – Riveted
British Steel
Source: ISEMAR – May 2001 BULK SHIPPING COMPANIES: TRENDS AND EVOLUTION.
Factors of stability of the shipping markets and long term relationships between
shipowner and shipper
Markets
Example
Speculation on ships
purchases / sales
Freight rate volatily
Number of Shipowners
Speculation on purchases
/ sales raw materials
Price of the raw
materials
Request for regular
transport
Relationships
shipowners / shippers
Stable
Coal
Unstable
Cereals
weak
strong
weak
weak
strong
strong
weak
strong
strong
weak
strong
weak
strong
weak
Source: ISEMAR – May 2001
3.4 Definition on Relevant Markets under EC competition rules (97/C 372/03)
16
a. Relevant service markets in the tramp shipping sector
1. Energy trades: Energy dominates bulk shipping. This group of commodities,
which accounts for close to half of seaborne trade, comprises crude oil, oil products,
liquefied gas and thermal coal for use in generating electricity.
2. Agricultural trades: A total of twelve commodities, accounting for 13 per cent of
sea trade, are the products or raw materials of the agricultural industry. They include
cereals such as wheat and barley, animal feedstuffs, sugar, molasses, refrigerated food, oil
and fats and fertilizers.
3. Metal industry trades: This major commodity group, which accounts for 25 per
cent of sea trade, including raw materials and products of the steel and non-ferrous metal
industries, including iron ore, metallurgical grade coal, non-ferrous metal ores, steel
products and scrap.
4. Forest products trades: Forest products are primarily industrial materials used for
the manufacture of paper, paper board and in the construction industry. This section
includes timber (logs and lumber) wood pulp, plywood, paper and various wood products,
totalling about 145 mt. The trade is strongly influenced by the availability of forestry
resources.
5. Other industrial materials: There are a wide range of industrial materials such as
cement, salt, gypsum, mineral sands, alumina, chemicals and many others. The total trade
in these commodities accounted for 9 per cent of sea trade. They cover a whole range of
industries.
6. Other Manufactures: The final trade group comprises the remaining
manufactures such as textiles, machinery, capital goods, vehicles, consumer goods, etc.
The total tonnage involved in this sector accounts for only 3 per cent of sea trade, but many
of these commodities have a high value so their share in value is probably closer to 50 per
cent. They are the mainstay of the liner trades and their impact upon the shipping industry
is much greater than the tonnage suggests.
b. Relevant geographic markets in the tramp shipping sector
c.
Globality of the market vs. mobility of the vessels. Hold up?
d. Market entry barriers
17
There are different entry barriers to be identified in the different sectors of carriage.
Therefore to identify the barriers we should differentiate among the different sectors
depending on the cargo. As an approach we think that the differentiation made by the
Clarkson Research1 is quite accurate:
-Bulk carrier Sector
The sector as a whole could not be said to be characterized by high levels of
concentration. Our fixture data shows that around 400 charterers were active in the
dry bulk market in 2003, with the top 20 responsible for around 48% of tonnage. There
are a number of ‘pooling’ type arrangements. Although these are more numerous, but
possibly more ‘niche’ in the Handymax and Handysize sectors, there are also
prevalent in the Panamax and Capesize sectors whereby a major shipper can call on
a ‘pool’ of ships taken from a group of shipowners.
-Forest Products Carrier Sector
Although there is a "desire" for specialisation in forestry products transport, the reality
is that there is no such vessel that is "purely" a forest products carrier. The choices of
owners dictate the degree of cargo care specialisation he chooses to provide to find
the “right” customer at the right price.
The ownership of the fleet as defined above is fairly narrow with the top 20 owners
responsible for almost half the fleet. In the new building market only 15 new contracts
were reported last year. The second-hand market is more active, with 53 sales in
2003.
-Crude Oil Tanker Sector
In the past the oil majors have also played a significant role in the ownership of the
fleet, although this has diminished and they now only account for just 38 vessels.
The majority of the fleet is currently owned by independent owners. The top 20
owners account for almost half of the fleet by dwt, though ownership in the larger
sectors is more concentrated.
-Oil Products Tanker Sector
1
See Clarkson Research Studies, THE TRAMP SHIPPING MARKET, April 2004, pp.36 to 55
18
The ownership structure is relatively diverse. According to our database 509
companies own a total of 1,575 product tankers, with 269 vessels owned by 1-ship
companies. There are 26 companies who own 10 or more vessels. This sector has
received a massive amount of investment in the past few years and the order book for
delivery over the next couple of years stands at 37% of the fleet. In the wake of the
Erika and Prestige there has been a growing focus on modern, quality ships. Demand
is typically short-haul, matching refinery production with intra-regional demand.
However, some longer-haul routes serve major refining regions such as the Middle
East and the Caribbean.
The biggest charterers are the major oil companies and oil traders. In 2003 our fixture
database recorded 264 charterers of oil products tonnage, with the top 20 responsible
for 59% of trade.
-Chemical Tanker Sector
Owners operate liner-type parcel services based on Contracts of Affreightment with a
small number of major industrial charterers. The sophisticated end of the chemical
tanker market can be characterised as an “industrial shipping” sector. The operation of
chemical parcel services, with many different cargoes loaded into a single vessel with
as many as 30-40 tanks with separate pumping arrangements, is highly complex and
requires a high degree of skill / experience to ensure high utilisation levels are
achieved. The strong degree of control exerted by the major owners through long-term
contracts has produced less volatility in earnings and vessel prices than in standard,
commoditised bulk shipping.
-LPG Sector
The gas market is mainly cargo-driven. Trade patterns change not only due to product
swings, caused by seasonal supply and / or price fluctuations, but also due to
increasing consolidation from the industrial client base. The gas market constraints
are mainly set by throughput and storage limitations, not transportation limitations.
The worst case scenarios for the industry are tank top situations and / or plant
closures due to ullage problems. It is a.o. in such situations that the flexibility and
efficiency generated by pools add substantial value to the industry.
19
-LNG Sector
Due to the high infrastructure costs and requirement for stable supplies, LNG tankers
have in the past been built against long contracts (e.g. 20 years) to service specific
projects. LNG is a green fuel and demand has been growing very rapidly. World LNG
imports trebled between 1984 and 2000.
It has earlier been a common assumption that entry barriers have been moderate or
high due to the fact that the transportation has been considered as an integrated part
of value chain – organised by the exporter or the importer. These have been
significantly reduced over recent years through "outsourcing" of the maritime
transport-element, with the entry of new players/investors thanks to the lower
shipbuilding prices and the speculations of a growing market for the coming years.
Therefore we will not only have project-related vessels, but also LNG carriers
operating on a spot market and the emergence of independent LNG- shipowners.
-Reefer Sector
Reefer services are increasingly run as liner services (at least in season), especially
on the backhaul routes. Older tonnage tends to be utilised on a spot basis, often
during the peak three month season, and put into lay up for long periods. Besides the
competition from containerships, there is competition between reefer ships of different
size and age.
-Ro-Ro Sector
Diverse and somewhat elderly in some sectors, the Ro-Ro fleet offers unconventional
flexibility which allows it to carry whatever type of cargo is offered, and to serve ports
where access might otherwise prove a problem.
-PCTC Sector
In terms of market structure, there are few major multinational global customers with
high demands on service product, trading pattern, sailing frequencies etc., especially
with the "just in time" concept established in the vehicle industry as well as "ordered to
be built". The carriers are building reliable transportation and logistic systems for the
industry.
20
Major car carrier operators typically enter into long term COAs with vehicle
manufacturers. If they run into capacity constraints, the major operators will typically
time charter additional tonnage. Recently market conditions have been very tight, and
this has contributed to an absence of vessels becoming available on the second-hand
market. Unlike other segments, these vessels have never been a trading commodity
as they are often used by the owner during their full economical and technical life
time.
3.4.1
Functioning of pools and other arrangements under article 81 EC Treaty
PRELUDE:
Regulation (EEC) No 4056/86 for the application of competition
rules
(Articles 81
and 82
of the Treaty) to maritime transport services grants to liner conferences a
generous
exemption from the application of competition law. Though an exceptional
block exemption,
liner conferences are allowed to fix prices and regulate capacity,
practises that would otherwise be considered serious infringements of European
competition law.
In addition Regulation 4056/86 fails to grant the Commission
enforcement powers with respect to cabotage and tramp services, leaving these
important sectors without clear European
competition law supervision.
CATEGORIES OF MARITIME TRANSPORTATION
(i)
Unscheduled (tramp) transport
(ii)
Scheduled (liner) transport
(iii)
Specialised transport
POOL DEFINITIONS
A pool is based on a trust company which markets a transport service provided by the
pooling of ships from fleets belonging to various shipping companies. The shipping
companies manage freely a part of their ships while the other part is added to a
common structure where the risks as the benefits are shared in proportion to the share
of the ship owner according to predefined rules.
According EU Law following HARALAMBIDES H.E shipping pools are defined as “joint
ventures between ship-owners to pool vessels of similar types with central
21
administration, which are marked as single entity, negotiating voyage/time charter
parties and contracts of afreightment where the revenues are pooled and distributed to
owners”.
CHARACTERISTICS OF BULK SHIPPING POOLS
(i)
Similar tonnage
(ii)
Central administration (pool management company)
(iii)
Joint marketing,
(iv)
Negotiation of freight rates,
(v)
Centralization of voyage costs.
(vi)
freight collection
(vii)
weighing system
(viii)
revenue distribution
(ix)
fair share.
1) Types of pools or other arrangements that fall within the Scope of the article 81(1)
The Pooling tries to assure that every line member obtain an appropriate level of
freights, contemplated as a whole, and that every line carries an appropriate goods
traffic. Three classical pools can be object of study methodologic. In this sense, “cargo
pools”, “freight pools” or the “mixed pools”.
The existence of a “fixed freight” established by the tramp shipping pools for certain
markets, (i.e dry bulks and tanker markets)
is the point which would break the free
competence between tramp services and liners, obligating the user to accept those
fixed prices, following this practise in the Scope of article 81 (1).
In this sense see “Do the Tanker pools influence Market Rates? The Case of Tankers
International. D.R Glen & BT Martín Dept. of Business Studies London Guildhall
University.

Prohibition of agreements, which have as object o effect to restrict
competition.

Horizontal and vertical agreements.
22
(i) Types of pools: Controlled by its members, those controlled by an
administration.
(ii) Prohibiting cartel activities preventing/distorting competition within the
common market.
(iii) Those with price fixing, limit/control/share markets/supply.
(iv) Those with Capacity regulation
(v) Those with non complete provisions.
(vi) Restrictions on withdrawal from the pool.
(vii) Specialised Services.
(viii)
2)
Pools: Full Function joint ventures
Pools that fulfil the four cumulative conditions of the Article 81 (3) EC Treaty
A pool can be exempted from the competition law if the participants can show that the
users of the transportation share in the benefits via better services and lower costs of
transportation. In this sense the pools agreements, should indicate very clear, that the
agreement is to increase efficiency and vessel utilisation and of course at least it should
be demonstrable via customer share of benefits.
Tramp pools can be under the scope
of art. 81.3 if they can provide or create and stability trough the rewriting shipping pool
agreements.
Art. 81 (3)
1. Individual exemption (“self assessment”)
2. Block exemption
Art 81 (3) may be satisfied if:
(i)Improving the production of goods.
(ii) Promoting technical or economic progress with fair share of benefit to
consumers.
(iii) Restrictions must be indispensable.
(iv) No elimination of (substantial) competition.
23
3.4.2
Functioning of pools and other arrangements under article 82 EC Treaty
Abuse of a dominant position is a very relevant matter in some types of pools. In
particular. on closed pools (based on income distribution) which are introducing barriers
to entry creating a market dominance.
Concessions of category exemptions to Conferences do not obstruct that conferences
practises can be considered abusive violating art. 82. Question emerge with
interpretation of this article considering that it says “one ore more undertakings of
dominant position”
A pool Conference can not be considered as a sole company in Competence Law. We
should think in a collective dominant position, taking in consideration that necessity of a
genius link between the companies, which could reveal a uniform action in the market.
Points to be consider regarding art. 82.
(i)
Price fixing ( unfair pricing or other unfair trading condition) ;
(ii)
discrimination, e.g., applying dissimilar conditions;
(iii) tying, i.e., making the conclusion of contracts subject to acceptance of
supplementary
(iv) Obligations.
(v) Assessment criteria for abuse of a dominant position by liner conferences
Whether practice known as ‘fighting ships’ constituting abusive conduct
(vi) Conference members dominant on relevant market and having only one
competitor.
Tramp shipping pool will fall in scope of article 83 if the members increase ability to
control the market and improve earnings via joint negotiation with charterers and
enhancing an opportunity to achieve a position of prominence within a given market,
and/or to penetrate new markets by harnessing the expertise or commercial contacts of
other member companies.
3.4.3
Other specific issues
3.4.3.1 Joint ventures
(i)
“Full function” or non-full function pools.
24
(ii)
A “full Function” joint venture is one which performs on a lasting basis all
the functions of an autonomous economic entity.
(iii)
Article 81 does not apply to a full function joint venture agreement.
(iv)
A full function joint venture may be notitiable to the European Commission
under the ECMR, or to one or more national competition authorities.
3.4.3.2 Regulation 823/2000-Consortia block exemption
European regulation of liner shipping extends an exemption to the competition laws for
liner consortia, pursuant to EC Regulation 823/2000. Consortia include cooperative
arrangements among liner operators such as coordination of sailings, the pooling of
vessels and port facilities and the exchange, sale and rationalization of space. The
exemption is automatic for consortia with less than 30 or 35% market share (depending
on whether it operates within a liner conference).
Tramp shipping pools is a form of cooperation very similar to liner consortia. The
principal aims of a pool are to achieve stabilisation of revenues and optimisation of
services through more efficient use of capacity In this sense some exemptions of article
3.2 are carried out by Tramp shipping pools.
1) Main change: “trade share tresholds” replaced by “market share tresholds”
2) Tresholds unchanged: 30%-35%-50%
3) On 1 may 2004 opposition procedure (art.7) deleted and art.9 (obligations)
amended to bring in line with regulation 1/2003 (abolishing notifications and
giving more implementing powers to national competition authorities)
4) Extend until 25 April 2010 with Regulation 611/2005 (minor adjustments)
5) Pool administration: Manager. Attributions suspicious to be include in article 3.2
6) The exchange of information between members of the pool
3.4.3.3 Comparison to other sectors
(I) Regulation (EC) No 358/2003 on the application of Article 81(3) of the Treaty in
the insurance sector.
The compatibility of insurance pools with competition rules.
25
The main principle when assessing the compatibility of insurance pools with
competition rules is that a pool cannot be considered anti-competitive when it is
necessary to reach the minimum dimension required to cover a specific type of risk .The
Insurance pools can provide a low-cost method of providing self-insurance because
members of the pool practice good risk management and loss prevention efforts.
(ii) Subregionals container vessels pools
3.4.3.4 Other issues that may arise in the course of the investigation
(i)
The objective of the ship owner: to control its market and to become a
global shipping operator.
(ii)
The concentration of the container fleet in the hands of few owners
(iii)
The difficult emergence of the global shipping operators.
(iv)
The new emergence of market freight derivative.
3.5 New Regulations:
Council Regulation (EC) No 1419/2006 of 25 September 2006 repealing Regulation (EEC)
No 4056/86 laying down detailed rules for the application of Articles 85 and 86 of the
Treaty to maritime transport, and amending Regulation (EC) No 1/2003 as regards the
extension of its scope to include cabotage and international tramp services.
Cabotage and international tramp vessel services have been excluded from the rules
implementing Articles 81 and 82 of the Treaty originally laid down in Regulation (EEC) No
4056/86 and subsequently in Regulation (EC) No 1/2003. They are currently the only
remaining sectors to be excluded from the Community competition implementing rules.
The lack of effective enforcement powers for these sectors is an anomaly from a
regulatory point of view.
The exclusion of tramp vessel services from Regulation (EC) No 1/2003 was based on the
fact that rates for these services are freely negotiated on a case by case basis in
accordance with supply and demand conditions. However, such market conditions are
present in other sectors and the substantive provisions of Articles 81 and 82 already apply
to these services. No convincing reason has been brought forward to maintain the current
exclusion of these services from the rules implementing Articles 81 and 82 of the Treaty.
26
Similarly, although cabotage services often have no effect on intra Community trade, this
does not mean that they should be excluded from the scope of Regulation (EC) No 1/2003
from the outset.
As the mechanisms enshrined in Regulation (EC) No 1/2003 are appropriate for applying
the competition rules to all sectors, the scope of that Regulation should be amended so as
to include cabotage and tramp vessel services. Regulation (EC) No 1/2003 should
therefore be amended accordingly.
Since Member States may need to adjust their international commitments in the light of
the abolition of the conference system, the provisions of Regulation (EEC) No 4056/86
relating to the liner conference block exemption should continue to apply to conferences
satisfying the requirements of Regulation (EEC) No 4056/86 on the date of entry into force
of this Regulation.
Specific Bibliography
Clarkson Research Studies, THE TRAMP SHIPPING MARKET, April 2004
Dinger, Felix. WHAT SHALL WE DO WITH THE DRUNKEN SAILOR? EC COMPETITION LAW
AND MARITIME TRANSPORT, BASLERSCHRIFTEN zur europäischen Integration Nr.61. At the
EUROPA INSTITUT der Universität Basel
Erlund, Jan (Gorrissen Federspiel Kierkegaard) SHIPPING IN A COMPETITION LAW CONTEXT.
BIMCO CENTENARY GENERAL MEETING, Copenhagen 25/05/2005.
Erlund, Jan (Gorrissen Federspiel Kierkegaard) SPEECH DRAFT ON SHIPPING IN A
COMPETITION LAW CONTEXT. BIMCO CENTENARY GENERAL MEETING, Copenhagen
25/05/2005.
Ersboll,
Niels
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(Arnold
www.globalcompetitionreview.com
&
Porter
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EU
TRANSPORTATION.
At:
Guinier, Alfons (ECSA), COMPETITION LAW IN THE EU. BIMCO CENTENARY GENERAL
MEETING, Copenhagen 25/05/2005.
Haralambides, H.E. (1996) THE ECONOMICS OF BULK SHIPPING POOLS. MARITIME
POLICY AND MANAGEMENT, 23(3), 221-237.
Levitt, Mattheu THE APLICATION OF EC COMPETITION LAW TO POOLING ARRANGEMENTS.
BIMCO CENTENARY GENERAL MEETING, Copenhagen 25/05/2005.
Packard, William V, SHIPPING POOLS. Lloyd’s of London Press, London/New York 1995
Statistical Sources and Markets Information
BALTIC EXCHANGE: www.balticexchange.com
BIMCO: www.bimco.com
27
CLARKSON RESEARCH: www.crsl.com
GLOBAL INSIGHT: www.globalinsight.com
INSTITUTE OF SHIPPING ECONOMICS AND LOGISTICS: www.isl.org
Decisions of the European Court of Justice and the Court of First Instance
Case 167/73 Commission v France (French Merchant Seamen) [1974] ECR 359
Case 26/76 Metro-SB-Grossmärkte GmbH & Co. KG v Commission (No 1) [1977] ECR 1875
Case 13/83 European Parliament v Council [1985] ECR 1513
Case 161/84 Pronuptia de Paris GMBH v Pronuptia de Paris Irmgard Schillgalis [1986] ECR 353
Case 75/84 Metro-SB-Grossmärkte GmbH & Co. KG v Commission (No 2) [1986] ECR 3021
Joint Cases 209 - 213/84 Ministère Public v Lucas Asjes and Others (Nouvelles Frontières) [1986]
ECR 1425
Joint Cases 89/85 104 /85 114/85 116/85 125 - 125/85 A. Ahlström Osakeytiö and Others v
Commission [1988] ECR 5193
Case 66/86 Ahmed Saeed Flugreisen and Silver Line Reisbüro v Zentrale zur Bekämpfung
unlauteren Wetttbewerbs [1989] ECR 803
Joint Cases C-395/96 and C-396/96 Compagnie maritime belge transports and other v Commission
(CEWAL) [2000] ECR I-1365
Joint Cases T-68/89 T-77/89 T-78/89 Societa Italiano Vetro v Commission [1992] ECR II-1403
Case T-141/89 Montepide SpA v Commission [1992] ECR II-1155
Case T-148/89 Tréfilunion v Commission [1995] ECR II-1063
ENGLISH CASES:
Case Attheraces Ltd. and another v. British Horse Racing Board and another [2005] All ER (D) 336
Case Napp Pharmaceutical Holdings Ltd and others v. Director General of Fair Trading [2002] 4 All
ER 376
Case Atlantic Container Line AB and others (supported by the European Community Shipowners’
Association ASBL and another, interveners) v European Commission (supported by the Freight
Transport Association Ltd and others, interveners) [2002] All ER (EC) 684
Case Shaw and another v European Commission [2002] All ER (EC) 501
Case Wouters and others v Algemene Raad van de Nederlandse Orde van Advocaten (Raad van
de Balies van de Europese Gemeenschap intervening) [2002] All ER (EC) 193
Case Tate & Lyle plc and others v European Commission [2001] All ER (EC) 839
Case The Coca-Cola Co and another v European Commission (supported by The Virgin Trading Co
Ltd and another, interveners) [2000] All ER (EC) 460
28
Case Cie Maritime Belge Transports SA and others v European Commission and others [2000] All
ER (EC) 385
Case Micro Leader Business v European Commission [2000] All ER (EC) 361
Commission Decision and other Commission documents
European Parlament Report 2005/2033 (INI) on the application of the European Rules of
competition in the field of the maritime transport
Decision 94/985/EC, Far Eastern Freight Conference (FETC), December 21, 1994, OJ 1994 L
376/17
Decision 94/980/EC, Trans-Atlantic Agreement (TAA), October 19, 1994, OJ 1994 L 376/1
Decision 1999/234/EC, Trans-Atlantic Conference Agreement (TACA), September 16, 1998, OJ
1999 L 95/1
Decision 1999/485/EC, Europe Asia Trades Agreement (EATA), April 10, 1999, OJ 1999 L 193/23
Commission (1985), Progress towards a Common Transport Policy Report on Maritime Transport,
COM (85) 90 final, March 6th, 1985
Commission (1990), Communication by the Commission - Report on the Possibility of a
Group Exemption for Consortia Agreements in Liner Shipping, COM (90) 260 final, June 18th 1990
Commission (1995), Commission Working Document on Regulation 870/95
http://www.europa.eu.int/comm/competition/antitrust/report_comm_reg_870_95_de.pdf
at:
Documents of public interest
Productivity Commission of Australia, International Liner Cargo Shipping: A Review of Part X of the
Trade
Practices
Act
1974,
Report
No
9,
1999,
at:
http://www.pc.gov.au/inquiry/shipping/finalreport,cit.: Report by the Australian Productivity
Commission on Liner Shipping, 1999
Submission of the CSC to the OECD on Maritime Regulatory Reform, 2001, at:
http://www.oecd.org/dsti/sti/transpor/sea/prod/ CSC_Competition_Policy.pdf, cit.: CSC Submission
to the OECD, 2001
Submission of the ESC to the OECD on Maritime Regulatory Reform, 2001, at:
http://www.oecd.org/dsti/sti/transpor/sea/prod/ESC Competition Policy pdf, cit.: ESC submission to
the OECD, 2001
Submission of the NITL to the OECD on Maritime Regulatory Reform, 2001, at:
http://www.oecd.org/dsti/sti/transpor/sea/prod/NITL Competition Policy.pdf, cit.: NITL submission to
the OECD, 2001
Submission of the TACA to the OECD on Maritime Regulatory Reform, 2001, at:
http://www.oecd.org/dsti/sti/transpor/sea/prod/TACA_submissions.pdf, cit.: TACA submission to the
OECD, 2001
Submission of the TSA to the OECD on Maritime Regulatory Reform, 2001, at:
http://www.oecd.org/dsti/sti/transpor/sea/prod/TSA_Competition_Policy.pdf, cit.: TSA submission to
the OECD, 2001
29
Submission of the WSC to the OECD on Maritime Regulatory Reform, 2001, at:
http://www.oecd.org/dsti/sti/transpor/sea/prod/WSC_Competition_Policy.pdf, cit.: WSC submission
to the OECD, 2001
Federal Maritime Commission, The Ocean Shipping Reform Act. An Interim Status Report, 2000, at:
http://www.fmc.gov/OSRA%20INTERIM%20STATUS%20REPORT.pdf, cit: FMC, Interim Report,
2000
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30