ACCC seeks views on exemption for liner shipping


Watchdog argues permissive regime can no longer be justified

ACCC seeks views on exemption for liner shipping
Rod Sims

 

A side-skirmish in the stevedore terminal access charges war opens with the Australian Competition and Consumer Commission (ACCC) looking again at containership-companies’ exemption from relevant laws.

The containership sector, also call liner shipping, provide cargo shipping services to or from Australia currently enjoy broad exemptions on the understanding that a trade-off of rates competition for settled and reliable transport leaves the nation is better off over all.

As the ACCC explains, Part X of the Competition and Consumer Act permits liner shipping operators to enter into agreements with each other about commercial matters such as freight rates, the ships to be used, and the quantity and kinds of cargo carried on particular trade routes.

Part X allows operators to make these agreements without risk of breaching competition laws, as long as the agreements are appropriately registered.

The 2015 Harper Review of competition law found that the liner shipping industry’s exemptions under Part X, put in place during the 1960s, are outdated, unnecessary and should be repealed.

The Harper Review recommended that the ACCC develop a class exemption for liner shipping agreements. This class exemption would only apply to agreements that are not likely to substantially lessen competition or are likely to result in overall public benefits.

A class exemption would help clear the way for repeal of Part X.

Another argument against the status quo is that liner shipping is undergoing sustained consolidation, giving them abusive market power against the stevedores that transfer containers to and from the ships.

This unequal relationship is said to be behind the stevedores turning to land-side revenue streams, particularly the infrastructure surcharge/terminal access charge on container haulage firms, though it is also said the stevedores have agreed to liner-shipping contracts that were always unsustainable.


Read how the ACCC views the nation’s port haulage predicament, here 


"Australia’s Part X regime is one of the most permissive of its kind among developed countries, several of which have recently moved to scale back their own competition exemptions for liner shipping," ACCC chair Rod Sims says.

"These sorts of exemptions have become harder to justify, as cargo ships have become bigger and the industry has consolidated.

"We recognise, however, that some limited co-ordination between liners visiting Australia may be in the public interest, by supporting efficient shipping services.

"This consultation process will allow us to examine how liners co-ordinate, so we can make sure the proposed class exemption would only apply to conduct that is clearly beneficial."

The ACCC’s ‘authorisation’ and ‘notification’ processes allow businesses to seek legal protection for arrangements that risk breaching competition law. However, unlike with the authorisation and notification processes, a class exemption applies automatically, without the ACCC reviewing specific agreements.

"We are also keen to hear from the industry about whether the class exemption should extend to collective bargaining by cargo owners and their representatives," Sims adds.

Deadline for submissions is February 28 and more information can be found here.

 

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