Freight News, Sea

Updated US OKs P3 agreement – but with safeguards

[ March 21, 2014   //   ]

The Federal Maritime Commission (FMC) has approved the proposed P3 vessel sharing agreement between Maersk, CMA CGM and MSC. It said that the agreement was not likely at this time to lead to reduction in competition or produce an unreasonable increase in transportation cost or reduction in service.

It would, in contrast, “produce operational efficiencies for the benefit of the US consumer” while “the new reporting requirements specifically tailored to this agreement’s unique authority will ensure we have timely and relevant information to act quickly should it be necessary,” it said.

The European Shippers’ Council welcomed the fact that the FMC had designed a control system including a communication mechanism between the P3’s neutral operational centre and the FMC. This will focus on operations, processes and details of rotations and, moreover, rates and their correlation with capacities will be under scrutiny and would limit the risk of market manipulation, said ESC. The US authorities would also require P3 ship owners to notify in advance any cancelled sailings or service modification resulting in changes in average weekly capacity.

However, the ESC argues that the UDS authorities could have gone further by also monitoring service quality.

Likewise, the UK-headquartered Global Shippers’ Forum thanked the FMC “for its thoughtful examination into the P3 Global Alliance Agreement. GSF secretary general Chris Welsh said: “GSF members understand and appreciate the benefits that can flow from vessel sharing agreements. In light of this, we warmly welcome the fact that the FMC has listened to the GSF and taken on board our specific concerns regarding the potential for unreasonable costs or rate rises. We also welcome the fact that the FMC is to implement alternative reporting requirements in its “on-going close monitoring of the Agreement”
Welsh added: “GSF further appreciates that the “new reporting requirements” have been specifically tailored to the P3’s “unique authority” to ensure that relevant information is provided to ensure that the FMC can act quickly in the event of abuses or unreasonable increases in rates and costs or reductions in services.”
In particular, GSF warmly welcomed the idea of a specific monitoring program to ensure that the P3 Parties ‘play by the rules’ as well as the safeguards drafted into the agreement to ensure that the P3 Parties negotiate independently and enter into separate contracts with third parties.
Attention now turns to Brussels where the GSF has recently submitted a new legal brief, framed by the EU’s guidelines on competition.
Welsh concluded: “The GSF is similarly hopeful that the European Competition authorities will fully examine the P3 under the EU competition guidelines and makes appropriate changes to the P3 as required by EU law”.
GSF has described the Alliance as a recognised industry ‘game-changer’ that will fundamentally change the structure and competitive state of the global container shipping market.

In a letter to the Vice-President Joaquin Almunia, EU Commissioner for Competition, the GSF urged him to fully investigate the agreement.

GSF has told Almunia, that in view of the lack of competition law enforcement in the container shipping sector in other parts of the world, industry is dependent on the Directorate General to enforce EU competition law for the benefit not only of EU trade but also that of its trading partners in the world’s main markets.”

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