THE Competition and Consumer Commission of Singapore (CCCS) is seeking public feedback for its recommendations to the Minister for Trade and Industry regarding the block exemption order (BEO) for liner shipping agreements, the competition regulator said on Monday (May 27).
CCCS is proposing that the BEO, which will expire on Dec 31, be renewed by five years from Jan 1, 2025 to Dec 31, 2029.
The BEO exempts liner shipping agreements from the prohibition against anti-competitive agreements under section 34 of the Competition Act, provided certain conditions and obligations are fulfilled.
These include non-mandatory adherence to tariffs, and allowing member liner operators to enter into individual confidential contracts and offer their own service arrangements.
The BEO was first made in 2006 by the Minister for Trade and Industry, on the recommendation of CCCS.
The BEO currently applies to vessel sharing agreements for liner shipping services, which refer to agreements among liners to provide shipping services – the sea transport of goods on a regular basis between ports – that do not include discussions on prices to customers.
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It also applies to price discussion agreements for feeder services. Feeders provide liner shipping services to main line customers by offering space on the feeder vessels for cargo of main lines, which is necessary for smaller ports that main line vessels may not be able to call at.
In its announcement, CCCS said it has assessed that the vessel sharing agreements for liner shipping services and price discussion agreements for feeder services will generate net economic benefit for Singapore.
The vessel sharing agreements for liner shipping services support Singapore’s status as a transhipment hub and enhance competition among liners by lowering the barriers to entry for smaller liners to provide services, despite their smaller scale.
Such agreements also have environmental benefits as they enable liners to share, use and deploy larger vessels that are more environmentally friendly.
As for price discussion agreements, they remain for some feeders’ businesses, and participating in these agreements will attract feeders to base their headquarters and operations in Singapore.
“Feeders, in turn, attract and anchor main lines to Singapore, thus expanding Singapore’s shipping network to support its transhipment hub,” said CCCS.
The competition regulator noted that anti-competitive effects from such agreements appear to be limited, as surcharges imposed by feeders on main lines are still subject to commercial negotiation with main lines, which are likely to possess bargaining power. Main lines may also be motivated to operate their own feeder services should the prices offered by feeders be uncompetitive.
The regulator is currently seeking feedback on the possible impact of its proposed recommendation on the Singapore economy and on maritime industry players, such as main lines, feeders, port operators, freight forwarders, exporters and importers.
It is also seeking submissions on the current and impending usage of the liner shipping agreements that involve inland carriage of goods, which occurs as a part of through transport.
The public consultation will close on Jun 17. CCCS will make its recommendation after considering written submissions from the consultation.
