The Singapore Shipping Association (SSA) has welcomed the decision by Singapore’s Minister for Trade and Industry to extend the Competition Block Exemption for Liner Shipping Agreements Order (BEO) for another five years until December 31st, 2020 – in line with a recommendation made to the Ministry by the Competition Commission of Singapore (CCS).
The BEO, which was first issued in July 2006, exempts a category of liner shipping agreements from the prohibition against anti-competitive agreements under section 34 of the Competition Act.
These include non-mandatory adherence to tariffs, and allowing member liner operators to enter into individual confidential contracts and offer their own service arrangements. It was extended in 2010 for five years until 31 December 2015.
Paying tribute to the “many members who had worked so constructively and collaboratively with the SSA Secretariat to achieve this positive result”, President of SSA Esben Poulsson, said any help that could be given to an industry as important to free trade and globalisation as container shipping is, must be welcomed.
He said: “To me it is self-evident that the dismal state of the global container market and the extremely low box rates being paid, clearly prove that whatever help the industry can be given at this point will be most welcome. These historically low rates illustrate just how competitive the market is and highlight how any talk of this measure being ‘anti-competitive’, is just plain wrong.”
In making its recommendation, the CCS received five submissions in response to the public consultation. Four of the respondents were supportive of the proposed extension of the BEO, while one respondent was not in favour.
The CCS carefully considered the changes in the international regulatory environment in its review and noted that antitrust exemptions for liner shipping agreements generally remain the regulatory norm worldwide. CCS also took into consideration, amongst other factors, the size of the Singapore economy, that Singapore is not a major port of origin or destination, and that a very large proportion of Singapore’s container cargo throughput involves transhipment.
As a result, it assessed that liner shipping agreements, which fulfill the requirements set out in the BEO, continue to meet the net economic benefit criteria and qualify for exemption from the prohibition against anti-competitive agreements.