GUIDELINES ON THE APPLICATION OF ARTICLE 81 OF THE

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					    GUIDELINES ON THE APPLICATION OF ARTICLE 81 OF THE EC TREATY TO MARITIME
                             TRANSPORT SERVICES

                 A Submission to the DG Competition, European Commission

                               By the European Shippers’ Council

                                         9 November 2007

Introductory remarks

1. The European Shippers’ Council (ESC), representing the freight interests of some
   100,000companies across Europe, has had a long-standing interest, and played a central
   role in the debate and legal cases concerning liner shipping competition policy, for some
   twenty years. Shippers around Europe hugely welcomed the unanimous adoption, at the 25th
   September 2006 Competitiveness Council, of the Commission’s proposal to repeal Council
   Regulation 4056/86.

2. ESC fully supports the development of ‘Guidelines’ that align the treatment of the liner
   shipping sector closer to that of most other industrial and service sectors in regard to their
   compliance with Community competition law. In particular, this organisation strongly believes
   that the ‘Guidelines’ must be general in nature and avoid indicating any sanction for
   specific activities beyond those already defined under EU competition law in the
   decisions of the European courts and Commission.

3. ESC believes such an approach will ensure the correct approach to risk management in the
   liner shipping sector that self-governance on the application of competition law requires.

4. In this regard, the development and implementation of controversial proposals for a system of
   information exchange between different liner shipping companies, as proposed by the
   European Liner Affairs Association would be constrained by doubt over their legality under
   EU competition law. Such caution is essential in order to allow the liner shipping sector
   time to adjust to a world of individual market assessment without collective decision-
   making. ESC welcomed the Commission’s analysis of the ELAA proposals (published
                     1
   September 2006 ) and agreed with its conclusions that were highly critical of the ELAA
   proposals, both as a package, and regarding individual elements of the proposals.

5. The ESC’s endorsement of the Commission’s thorough assessment is contained in our
   submission of October 2006. In brief, ESC concluded:

     •   The ELAA revised proposals, as a package, breach Article 81.1 of the Treaty; neither do
         they satisfy the conditions of 81.3 for exemption from the rules on restricting competition;

1
  Information Note: issues raised in discussions with the carrier industry in relation to the
forthcoming commission guidelines on the application of competition rules to maritime transport
services.




                                                                                                    1
    •   Capacity forecasts proposed would reduce competition in the liner shipping trades, which
        could artificially inflate prices without any commensurate increase in the service levels;

    •   Volume and capacity data combined would hugely influence and enable coordinated
        capacity management among the carriers that would significantly influence contract
        negotiations with shippers

    •   The joint discussion and interpretation of price indices, volume, capacity and vessel
        utilisation data between otherwise competing carriers would increase the chances of co-
        ordinated, anti-competitive responses to market conditions

6. ESC has assessed the latest draft of the proposed Guidelines. Much of what is
   contained in the draft is acceptable to ESC; nevertheless there are some additions to
   the latest draft, that are understood to have been added following consultation within
   the Commission and between different Directorate Generals, that ESC cannot accept in
   their current form.

7. In summary, this response sets out to:

    •   Explain the background to ESC’s concerns
    •   Explain the reasons for ESC’s cautious approach
    •   Identify the precise offending paragraphs and propose amendments that would satisfy
        ESC

Areas of principal concern

8. ESC has identified a number of areas in the proposed draft guidelines where it is possible to
   interpret the text in a way that suggests certain activities currently employed by conference
   secretariats and their members might still be permitted when the block exemption is removed.

9. The principal area of concern rests around the issue of a system of information exchange,
   and more fundamentally the purpose of the information exchange being proposed by the
   carriers’ association, the European Liner Affairs Association.

10. The proposed guidelines as currently drafted make numerous references to information
    exchange. ESC has no objection to general references being made. However, it does object
    to the many references, made implicitly, to the proposals of the ELAA for a system of
    information exchange.

11. Exchanges of information permitted under the Treaty rules are intended to provide
    opportunities for individual companies to choose a business strategy that improves their
    performance and competitive position over their competitors. The ELAA proposals are
    intended to effect, through a collective approach, the matching of supply with demand across
    the industry, globally. In this way it is bound to result in less competition than would otherwise
    be the case were the system of information exchange not to exist. As the draft guidelines
    state:

        `Paragraph 40: ‘The exchange of information may be a facilitating mechanism for the
        implementation of an anti-competitive practice … Where an exchange of information is
        ancillary to an anti-competitive practice its assessment must be carried out in
        combination with an assessment of that practice. These Guidelines do not address
        such exchanges of information [emphasis added].’



The reason for a cautious approach


                                                                                                     2
12. Why is it that the European Shippers’ Council is being extremely cautious over likely
    inferences contained in the present draft?

13. To answer this one must be mindful of the record of some who have sought to influence this
    debate and have supported the continuation of the practices and objectives of the liner
    conference system.

14. To explain further, a brief history of the campaign to reform the liner shipping sector has
    been provided below:

a) The liner conference system goes back some 130 years. In an attempt to protect themselves
   from the new steam ships plying trades to India and the Far East, the traditional liner shipping
   companies established cartels to control the important trades with Europe. The principle
   remains today. There are around 150 liner shipping conferences covering all the trading
   routes around the world.

b) In 1986 the European Council of Ministers adopted Regulation 4056 to bring the industry into
   line with European Community competition law. Despite opposition from shippers, exemption
   was granted from competition rules under the Treaty of Rome on the basis that the
   conference system yielded benefits for their customers – one of the four conditions for
   exemption under Article 81(3).

c) Since the late 1990s governments have begun to repeal the laws that previously were seen
   to protect the container shipping industry but were seen increasingly to put them at risk from
   self destruction. Whilst some have faced the issue head on, many other shipping lines have
   remained reluctant to acknowledge that the day of protectionism has passed, and continue to
   this day to argue for its continuation.

The legal challenge

15. Between 1992 and 2000 shippers made cases against member lines of certain conferences
    (such as the TAA and its replacement (largely by name only) the TACA conference) for:
    • illegally price fixing between conference lines and non-conference lines,
    • fixing prices for inland transport (also a charge made against the Far Eastern Freight
        Conference)
    • managing shipping capacity in order to drive up rates
    • agreeing not to enter into individual service contracts and agreeing terms and conditions

It was argued that the conference lines were in breach of EU competition law in the following
ways:
    • Abuse of a dominant position affecting trade within the EU
    • The restriction and distortion of competition
    • Failure to meet the conditions for exemption from competition rules (i.e. activities not
         benefiting customers)
    • Extending the exemption to restrict and distort competition to inland transport services
         offered by the conference shipping lines

16. In 1994 the European Commission adopted a decision against the TAA upholding the legal
    challenge made by ESC, British and French Shippers’ councils. In 1995 the Consortia
    Regulation (now modified under regulation 823/2000/EC) was introduced with the support of
             2
    shippers who hailed liner shipping consortia as an appropriate replacement of liner shipping
    conferences.

2
  Allows shipping lines to establish groups to gain economies of scale and share equipment; it prohibits price
fixing; it gives automatic exemptions for lines in consortia but outside conferences where the market share


                                                                                                            3
17. Four years after the first decision against the TAA by the European Commission, one name
    change and a further challenge against the TACA conference, the remaining member-lines of
                                                                                              3
    the conference put forward a revised conference; but in 1998 this so-called Revised TACA
    was also objected to by ESC. It took another four years of long and drawn-out negotiations
    and consultation with the conference before the European Commission (but not ESC)
    accepted it in 2002. In 1999, the European Commission formally adopted its original decision
    against the TACA which was immediately appealed by the member lines.

18. Meanwhile in the USA, shippers’ arguments against the restrictive and collective actions of
    liner conferences resulted firstly, in 1996, in the US Federal Maritime Commission insisting
    that the then-member lines of TACA allow Individual Service Contracts (ISCs). Secondly, in
    1998, this was formalized by the Ocean Shipping Reform Act, an act that introduced the right
    to independent action by lines and confidential individual service contracts for shippers on all
    trades to and from the USA.

    In 2002, some ten years after the first complaints had been submitted, the Court of First
    Instance (CFI) ruled in favour of the EC’s decisions against the TAA and FEFC, followed by a
    further ruling by the court upholding the principal decisions of the EC against TACA.

19. Following a recommendation by the OECD in 2002, the European Commission began in
    2003 to review Regulation 4056/86. However, even to this day, after the decision was made
                                                        th
    in September 2006 to repeal the Regulation by 18 October 2008, the conferences continue
    to exert their influence on the rates charged by the member lines: countless GRIs (General
    rate increases), and rate restorations, surcharges and THCs (Terminal Handling Charges),
    have been announced by the conference secretariats.

20. The latest and somewhat controversial announcement has been made by the Far Eastern
    Freight Conference (FEFC). They have issued a ‘new business plan’ which aims to raise the
    rates of all its members, in particular on eastbound (Europe-Asia) routes. It is not so much
    that many carriers believe the market has pushed the rate below what is economically viable,
    that concerns ESC and shippers more generally; but rather it is the way the lines are
    attempting (much as they have done for decades) to act as one united industrial bloc to raise
    rates in an identical fashion by an identical amount. Shippers that have confided in ESC have
    revealed a resilience among the lines, sticking rigidly to the increases proposed by the
    conference. There appears to be little if any latitude to establish individual rates that are
    reflective of any service differentiation or performance standard.

21. What ESC finds so difficult to come to terms with, is the blatant attempt to impose a cartel
                                                               th
    approach to liner shipping operations right up to the 18 October 2008. Thereafter, it is
    postulated the rates will have been artificially raised to a level that may establish a
    benchmark for individual contract negotiations well into 2008/09 – a benchmark rate reflected
    by the proposed rate index which the ELAA would like to establish as part of its system of
    information exchange.

22. ESC is mindful also of the fact that independent providers of informed analysis on the state of
    the liner shipping market, supply and demand, have sourced much of their information in the
    past from liner conferences. Some have made statements lamenting the passing of this


threshold is equal to or below 35%, and below 50% in those cases individually approved by the European
Commission.
3
  Again under pressure from the European Commission the members of TACA submitted a revised
agreement known as the Revised TACA incorporating amendments that might satisfy the EC to accept it as
lawful within Regulation 4056 and the Treaty .




                                                                                                         4
    source of information. Yet, if the ELAA proposals are implemented, the liner association may
    hold a virtual monopoly on information and analyses.


23. The concern in this regard is being exacerbated by reports that suggest other sources of
                                                                4
    information may be drying up also: a recent press article cited the concerns of a French
    analyst (from the company AXS-Alphaliner) that many new ship orders were containing
    contractual ‘non-disclosure’ clauses to prevent the ship yards from informing the public
    (through press announcements, for example) of new orders they had captured. It could be
    difficult for anyone, other than lines within an information exchange to assess future supply of
    liner shipping capacity.

A scenario

24. The attached scenario featuring a small-to-medium trade provides an assessment of the
    likely consequence of ELAA's proposed system of information exchange (see Annex 1).It
    suggests how likely it will be for the system to result in co-ordinated capacity
    management between a large shipping line and a consortia in order to introduce
    higher rates.

25. The ELAA proposed information exchange is extremely relevant to ESC’s concerns in
    relation to the Guidelines: it explains the atmosphere of suspicion in which shippers and the
    ESC make their assessment of inputs to the Guidelines by carriers’, their representatives and
    supporters. ESC believes it is important too for the Commission and Member States to keep
    in their minds the possible linkage between carriers’ desire for certain references and
    sentences to be included in the Guidelines, and their potentially ulterior motives that have
    been alluded to here.

26. Nevertheless, the ELAA proposed system of information exchange is beyond the scope of
    the proposed EC Guidelines, as previously shown: It should not form any part of the
    Guidelines.

27. The remainder of this submission deals with the specific paragraphs of the current
    draft Guidelines that ESC has concerns over and puts forward suggestions for
    amending the text to remove those concerns.




4                                nd
 American Shipper Newswire, 2 October, 2007, ‘Ship order secrecy could tip supply and
demand balance, says analyst’.


                                                                                                   5
      European Commission Draft Guidelines on the
    application of Article 81 of the EC Treaty to Maritime
     Transport Services: ESC proposed amendments
Introduction


1      The European Shippers Council (ESC) considers that the substantive content of the
       European Commission's informal first draft of the Maritime Competition Law Guidelines
       (19 April 2007) represented an appropriate statement of the competition law principles
       applicable to the shipping sector under Article 81 of the EC Treaty from 18 October 2008.
       The ESC's members do not understand why the Commission, following inter-service
       consultation, has revised the draft guidelines significantly and in a way that is contrary to
       the Commission's own analysis in its Issues Paper (27 September 2006) as well as
       unjustified in the light of past competition law precedent. The ESC's concerns arise
       primarily from the changes made by the Commission to the section of the draft
       Guidelines entitled: "3.2 Information Exchanges between competitors in liner
       shipping" (paragraphs 36 (old 33) to 60 (old 53)).

2      The ESC's concerns relate to three main issues:

       (a)     the scope of the guidelines is not limited to the application of Article 81(1)
               to pure information exchange agreements (contrary to paragraphs 40 and
               46): the text needs to be amended to be consistent with the Commission's
               express statements that the guidelines will not cover information exchanges
               linked to, or supporting, cartels or other unlawful conduct (paragraph 40) and that
               reference should be made to the general guidelines notice for advice on the
               application of Article 81(3) to questions relating to the four conditions of
               exemption (paragraph 46);

       (b)     the failure of the guidelines to explain the importance of the purpose of an
               information exchange - the treatment of public domain information must be
               clarified and misleading statements deleted, especially in the context of future
               capacity forecasts and carrier only meetings:

               (i)     the exchange of information on future capacity forecasts even if it is in
                       the public domain should not be permitted where the purpose of the
                       exchange is to facilitate the discussion of a forecast report in carrier-only
                       meetings;

               (ii)    discussion "by carriers" or by members of a Trade Association of a future
                       capacity forecast report prepared by the Trade Association on the basis
                       of publicly available data, and potentially of the price index, should be
                       stated to infringe Article 81(1) without further consideration as to how
                       Article 81(3) might apply in specific circumstances, other than an express
                       reference to the application of the general guidelines on Article 81(3).



                                                                                                  6
    (c)     the failure of the guidelines to explain the importance of the relevant market
            characteristics of an information exchange, including the existing links between
            the participants and the documentary evidence of their future intentions to
            continue their past practices in draft proposals for information exchanges -
            amendments need to be made to the text to clarify that:

            (i)     recent volume and capacity information exchange should not be
                    permitted by lines already exchanging information in consortia;

            (ii)    price index of average prices should not be permitted by lines which
                    have been in the habit of fixing prices in a liner conference tariff and
                    exchanging individual price data in a liner conference cartel.

3   Before addressing each of these issues in turn, there are a number of preliminary matters
    which the ESC wishes to highlight to the Commission:

    (a)     the Guidelines should be clear, simple and based on case law or economic
            principle, since there is a serious risk that the Commission will have to explain
            the economic reasoning behind the Guidelines before the Community Courts in
            Luxembourg and before national courts (as Amicus Curiae);

    (b)     there is no legal basis now that Regulation 4056/86 has been repealed by the
            Council and the Parliament, for a different interpretation of competition law in the
            shipping sector from that to be applied in any other sector;

    (c)     the shipping sector can be expected (as demonstrated by the proposals, revised
            proposals and revised revised proposals of the ELAA), to continue to seek to
            restrict (if not to eliminate) competition between all the major liner shipping
            operators as if the liner conference Cartels were still lawful;

    (d)     undertakings which were former members of a cartel are not prohibited from
            establishing trade associations and exchanging information legitimately.
            However, it is necessary for the former liner conference lines to demonstrate that
            they are capable of complying with competition law and not carrying on doing
            business as before, depriving shippers of any benefits from new pricing and
            capacity competition between the lines. In particular, the Commission will need
            to be vigilant to ensure that while competition will develop in different ways and
            subject to different legal systems, such as those in the US and certain countries
            of the Far East, which permit the cartelisation of international shipping, EC
            competition law is not robbed of its effect by the conduct of the lines on other
            trades than those directly serving the EU;

    (e)     a statement of the general principles and an overview of past practice on
            exchange of information agreements should not be prescriptive or propose
            legitimacy for practices which would clearly not be acceptable in other sectors.
            For example, in the light of the characteristics of the liner shipping market where
            strong links will remain through consortia membership after 18 October 2008,
            discussion at carrier only meetings of data relating to future capacity forecasts,


                                                                                              7
                even if those forecasts are available to individual companies in the public
                domain, go beyond the bounds of exemption foreseen by Article 81 (3). Care
                must be taken not to allow the guidelines to sanction specific ELAA proposals
                when the Commission has no experience of the effect that those proposals will
                have in the market.

Scope of the Guidelines

4       The scope of the guidelines should be limited to the application of Article 81(1) to pure
        information exchange agreements as stated in paragraph 40, and without confusing
        attempts to apply Article 81(3) to specific circumstances when paragraph 46 states that
        the guidelines will be limited to Article 81(1) with a general reference to the Article 81(3)
        guidelines notice.

5       There are two main issues concerning the scope of the guidelines: Limitation to pure
        information exchange agreements and limitation to Article 81(1) without consideration of
        Article 81(3) which is covered by the Article 81(3) guidelines notice.

Issue One: limitation to pure information exchange agreements

First, the guidelines are rightly stated to be limited in scope to "pure information exchanges", as
opposed to those linked to cartels or concerted practices:

        "The exchange of information may be a facilitating mechanism for the implementation of
        an anti-competitive practice, such as monitoring compliance with a cartel. Where an
        exchange of information is ancillary to an anti-competitive practice its assessment must
        be carried out in combination with an assessment of that practice. These Guidelines do
        not address such exchanges of information." (emphasis added) (paragraph 40).

6       This means that there should be no reference to cases or precedents which
        concern the assessment of cartels or concerted practices under Article 81(1), since
        the reader will be confused by this and may draw the wrong conclusions from the
        guidelines.

Consequences for text

7       It follows that the references to case law on cartels or concerted practices should
        be deleted:

        (a)     Paragraph 42: the second (final) sentence and footnote 41 referring to the Suiker
                Unie case at paragraphs 173-174, should be deleted because it concerns the
                standard for assessing concerted practices under Article 81 which is important
                only for that reason (in that it emphasises the tests of contacts plus influence on
                competitors and contacts plus disclosure to competitors which is relevant to
                situations where competitors meet in private):

                "…..each economic operator must determine independently the policy which he
                intends to adopt on the common market including the choice of the persons and



                                                                                                   8
               the undertakings to which he makes offers or sells. Although it is correct to say
               that this requirement of independence does not deprive economic operators of
               the right to adapt themselves intelligently to the existing and anticipated conduct
               of their competitors, it does however strictly preclude any direct or indirect
               contact between such operators, with the object either to influence the conduct
               on the market of an actual or potential competitor or to disclose to such a
               competitor the course of conduct which they themselves have decided to adopt
               or contemplate adopting on the market (emphasis added)." (Paragraphs 173-
               174).

       (b)     Paragraph 44, Footnote 45: the last sentence and the reference to the Wood
               Pulp case in the footnote 45 should be deleted because it concerns the test for a
               concerted practice, and in particular, a system of unilateral quarterly price
               announcements which is not information exchange. In fact, in this case the ECJ
               essentially upheld a separate infringement based on unlawful exchanges of
               sensitive price information run by Fides, a Swiss trust company.

Issue Two: Article 81(3)

8      Second, the guidelines make it clear in paragraph 46 that the "guidance below [in
       paragraphs 47 to 60] is related to the analysis of a restriction of competition under Article
       81(1) of the Treaty. Guidance on the application of Article 81(3) of the Treaty is to be
       found in the general notice on the subject [48]" (paragraph 46).

9      This means that there should be no reference to examples of behaviour where Article
       81(3) is said to cover specific circumstances, since the reader will be confused as to
       which guidelines on Article 81(3) should be considered and may draw the wrong
       conclusions by not considering the general notice on Article 81(3).

10     This is particularly unhelpful when it can be seen that an attempt is being made in the
       draft maritime guidelines to decide how Article 81(3) should be applied to specific but,
       conduct that has been communicated to the Commission in the form of the ELAA's
       "revised revised proposals".       Guidelines are not intended to refer to specific
       circumstances. In the context of shipping, where the Commission has little if no relevant
       experience of the assessment of liner shipping conduct outside the context of liner
       conferences and consortia, it would infringe the general principles in Community law of
       legal certainty and legitimate expectations for the Commission to try to guess what sort of
       conduct shipping lines will adopt and with what effect on the market.

Consequences for the text

11     It follows that the references to specific conduct in the context of Article 81(3)
       should be deleted:

       (a)     Paragraph 38: the last thirty words (after the reference to the Consortia Block
               Exemption Regulation) should be deleted or deleted and replaced with a
               reference to the general notice on Article 81(3), such as:



                                                                                                  9
               "Outside the scope of the block exemption, guidance on the application of Article
               81(3) of the Treaty is to be found in the general notice on the subject".

       (b)     Paragraph 58: it would be clearest to delete the whole paragraph since the
               application of Article 81(3) has already been dealt with in paragraph 46 by the
               general cross-reference to the guidelines on Article 81(3). However, if it is
               thought helpful to make some general statements about the four conditions of
               Article 81(3), the last twelve words of the first sentence at the very least should
               be deleted since that sentence gives the false impression that investment
               planning and efficient use of capacity will generally justify an exchange of
               information between carriers that restricts competition. It is clear from the
               Consortia Block Exemption that not every exchange of information can be
               justified in this way. On the contrary, where there is no operational cooperation
               providing efficiencies shared with shippers, it is difficult to imagine when an
               exchange of information could be justified outside the parameters of the
               Consortia Block Exemption.

       (c)     Paragraph 60: the second sentence should be deleted since it gives the
               impression that "carrier only meetings convened to discuss recent detailed data"
               which would otherwise constitute evidence of a cartel could be expected to
               satisfy the four conditions of Article 81(3). The second sentence also makes it
               unclear as to whether the word "legitimately" in the third and final sentence refers
               to Article 81(3) or to the non-application of Article 81(1).

12     The words "the basis of publicly available market information, or" in the third and final
       sentence of paragraph 60 should also be deleted since discussions within a trade
       association of information in the public domain will not necessarily have a lawful purpose,
       as discussed in the context of "public domain" information exchange below. In particular,
       exchange of future capacity forecasts is likely to have only one purpose, namely collusion
       on investment or use of capacity, even if based on publicly available information. It is
       therefore likely to lead to legal disputes, and litigation in the European and national
       courts, if the Commission publishes guidelines which so transparently give the
       impression unlawfully in paragraphs 58 and 60 that the ELAA's revised revised proposals
       to hold "carrier only meetings convened to discuss" data based on "publicly available
       market information" is either not contrary to Article 81(1) or justifiable under Article 81(3)
       because it may "nonetheless create efficiencies, such as, better planning of investments
       and more efficient use of capacity".

Purpose of information exchange

13     It is generally accepted that there are two types of information exchange whose
       assessment under Article 81 differs depending on whether the information exchange:

       (a)     supports other unlawful conduct such as a cartel or concerted practice; or,

       (b)     is a pure information exchange independent of any unlawful conduct and not
               intended to have actual or potential effects of restricting competition.




                                                                                                  10
14     As discussed above, paragraph 40 of the draft guidelines rightly states that they do not
       address exchanges of information linked to or supporting other unlawful conduct, since
       such exchanges of information form part of that other infringement, even if they contribute
       to or are evidence of that infringement.

15     However, it is important to emphasise the key differences between lawful "pure
       information exchanges" within the scope of the guidelines and an information exchange
       that can be part of or evidence of unlawful conduct. In particular, the purpose of a pure
       information exchange can alter the assessment of that information exchange under
       Article 81(1) so that it becomes an information exchange supporting or facilitating
       unlawful collusion. This is particularly important in the context of exchanges of
       information which is publicly available in the market.

Purpose of exchange of publicly available information

16     The case law shows that the exchange of information in the public domain will not in
       principle infringe Article 81(1), In the Cartonboard case (Case T-354/94, Stora
       Kopparbergs Bergslags AB v Commission [1998] ECR II 2111 (CFI), at paragraph 112)
       the court criticised the Commission for considering an information exchange to be
       unlawful per se. In the UK Tractor case, the CFI acknowledged that the Commission had
       not treated the object of the information exchange as being a per se infringement. It held
       that it did not matter that the Commission was unable to demonstrate the existence of an
       actual effect on the market "since Article 81(1) of the Treaty prohibits both anti-
       competitive effects and purely potential effects, provided they are sufficiently appreciable,
       as they are in this case, having regard to the characteristics of the market" (Case T-
       34/92, Fiatagri UK Limited and New Holland Ford Limited v Commission [1994] ECR II
       905 (CFI), at paragraph 93).

17     Although the case law establishes that it is necessary to show that the potential effects of
       the information exchange, sufficiently appreciably, restrict competition, cases such as the
       Cement case have emphasised the importance of the purpose of the exchange with a
       result that the intent of the parties becomes relevant to the assessment of the lawfulness
       of the exchange. Once a broader cartel or concerted practice is shown to exist the
       nature of the information whether it is private or in the public domain, individual or
       aggregate, loses most of its relevance. In Cement (OJ 1994 L343/1), the Commission
       Decision said that even when the information exchanged is public, but its sharing is made
       for the purpose and in view of the discussions held among cartel members, the exchange
       of information will be ancillary to the Cartel:

       "……as regards Italy, Greece and Portugal, the price lists transmitted are those approved
       by the public authorities and relate to the entire trade in each country. The undertakings
       are able to obtain this information, but, even though it is public, they felt it necessary to
       send the information and to have it circulated. If the undertakings deemed it necessary to
       have the price lists for the trade in their country circulated, the reason is that such
       circulation of information was relevant to the discussions at the Head Delegates
       Meetings, discussions which, as stated in paragraph 1 above, related to the need to
       avoid the risks entailed by an increase in imports, to identify the causes of conflicts and to



                                                                                                  11
       reduce price differences so as to avoid any temptation to export (emphasis added).
       (Paragraph 47).

18     For the purposes of the Commission's draft guidelines it is important also that the
       Commission does not say anything inconsistent with the following extract from its 24th
       report on Competition Policy (1995), paragraph 144:

       "The Cartonboard, Cement and Steelbeam decisions deal not only with hardcore
       restrictions but also with other kinds of restraints of competition. Among these are
       various arrangements for the exchange of the information created by enterprises and
       trade associations in order to monitor market developments in general and the market
       conduct of suppliers in particular. Information exchange systems linked to the operation
       of the cartel very often constitute a restriction of competition and, therefore, violate Article
       81(1) of the Treaty. This applies most certainly to all exchanges of normally confidential
       and sensitive individual commercial information between competitors, as for example, to
       information on order backlog, machine closures and production rates by producers as
       found in the Cartonboard case or to information on minimum prices, ex-works prices
       (rebates included), or average prices by Member States as in the Cement case….
       furthermore, the Commission regards the exchange of less sensitive or even publicly
       available information as restrictive if it is used by participants in the furtherance of a
       cartel. While not in itself directly involving the fixing of prices or allocations of markets,
       such information exchange systems cannot be considered in isolation from the overall
       objectives of the cartel. Capacity studies and statistics on production and consumption
       as in the Cartonboard case or the direct exchange of prices as in the Cement case
       served as essential facilitating devices for the hard-core cartels established in both
       cases" (emphasis added).

19     The case law can be summarised as establishing that it is only if the exchange is
       limited to the collection of otherwise public data and that no evidence points to
       contact between competitors for the purpose of discussion and/or elaboration of
       strategies based on that data that it can be concluded that no infringement of
       Article 81 should be found. The statements by the CFI in the TACA case that the
       exchange of public information relating to service contracts in that case could not infringe
       the Treaty competition rules because they were in the public domain has to be read in the
       light of the facts of that case and the liner conference system which will be coming to an
       end on 18 October 2008.

Consequences for the text

20     It is, therefore, misleading for the Commission in paragraph 50 to state without comment
       that : "the exchange of information already in the public domain does not constitute an
       infringement of Article 81(1) of the Treaty." It is necessary for the Commission to include
       text along the lines of that set out in the paragraphs above to explain the difference
       between the two types of information exchange and how a pure information exchange,
       even of information already in the public domain, may require assessment under Article
       81(1) in the light of its purpose.




                                                                                                    12
21     Paragraph 50 should be amended so the first sentence reads as follows : "The pure
       exchange of information already in the public domain does not in principle
       constitute an infringement of Article 81(1) of the Treaty [53]." (emphasis added).

22     In footnote 53, paragraph 19 set out above should be included in addition to the
       reference to the TACA decision of the CFI.

23     Similarly, paragraph 56 should not include the general statement implied from the
       inclusion of the words "not based on generally publicly available data" that capacity
       forecasts in that situation will not require the exercise of caution when assessing
       exchanges of capacity forecasts even in aggregate form: "conversely, caution should be
       used when assessing exchanges of capacity forecasts not based on generally publicly
       available data, even in aggregate form, especially when it takes place in concentrated
       markets." (paragraph 56 first sentence) (emphasis added).

24     Accordingly, those words should be deleted from paragraph 56.

25     As discussed above, for the same reasons the reference to publicly available market
       information should be deleted from paragraph 60: "this situation should be distinguished
       from the discussions legitimately conducted within a trade association, for example, on
       the basis of publicly available market information, or on technical and environmental
       standards." (paragraph 60 last sentence) (emphasis added).

26     The previous versions of the ELAA's proposals which have gone through at least three
       revisions provide a good indication of the purpose of the ELAA's information exchange,
       especially in the context of future capacity forecasts and carrier only meetings.

Future capacity forecasts and discussion

27     ESC's concerns that the published draft Guidelines will be interpreted by the ELAA and
       the shipping lines to which the Guidelines are addressed as permitting the exchange of
       information on future capacity forecasts for the purpose of discussion, even when the
       data is said to be in the public domain, are the same as those set out by the Commission
       in its assessment of the ELAA revised proposal (16 June 2006) in the Commission's
       Issues Paper (29 September 2006). Those concerns of the Commission with which ESC
       agrees include:

       −       "[T]he key parameter to co-ordinate competitive conduct effectively is
               through future capacity data." (paragraph 55).

       −       "The fact that [the data] originates from almost all market participants
               would make it much more authoritative than any individual company
               announcement or experts' prediction". (paragraph 56).

       −       "[I]t might be possible to use it to signal to competitors and co-ordinate, at
               no cost, future market conduct before the strategy takes effect in the
               market". (paragraph 57).




                                                                                            13
     −       "[I]t might be possible for individual carriers to frequently and strategically
             adjust their capacity depending on the competitors' future capacity
             movements all on the signals their competitors might send out". (paragraph
             58).

     −       "[A]n exchange of future aggregated capacity forecasts puts carriers in a
             position to anticipate one another's behaviour and possibly be strongly
             encouraged to align their conduct". (paragraph 59).

     −       "[T]he proposed exchange on capacity forecasts would most likely lead to
             the adoption of a common policy by all carriers participating in the
             exchange with the aim and result of providing services at above
             competitive prices". (paragraph 61). (emphasis added)

     -       "This effect is re-enforced by the ensuing carrier-only discussions"
             (paragraph 62).

28   The ESC shares the Commission's concerns that the effect of the proposed exchange on
     capacity forecasts would most likely lead to the adoption of a common policy by all
     carriers participating in the exchange with the aim and result of providing services at
     above competitive prices. It is clear from the modifications made by the ELAA in its
     revised revised proposals that the effect of the proposed exchange on capacity forecasts
     by producing a forecast report based on public information will also restrict competition.
     The ELAA or the Liner Shipping Association will not request that its members provide
     details of the capacity they intend to supply on a trade, but would rely purely on the same
     public information used by the other analysts and provide its own supply forecasts to its
     members and the general public. The publicly available information that the Liner
     Shipping Association will use is the announcements by lines about the purchase and
     delivery of new vessels. Using this information, the Liner Shipping Association and the
     analysts would prepare their own individual and independent forecasts on the supply
     situation going forward. The forecast would be updated regularly as new information
     becomes available, likely on a quarterly basis.

29   If, as appears to be the case, analysts are already producing the same forecasts which
     can be accessed by the shipping lines on an individual basis without any risk of collusion,
     the restrictions of competition inherent in the information exchange envisaged by the draft
     Guidelines cannot be justified under Article 81(3). In particular, the exchange and its
     risks for competition are unnecessary.

30   The purpose (and effect on competition) of a trade association analysing publicly
     available information "to provide its own supply forecasts to its members" (and the
     general public) can only be to assist its members to collude and co-ordinate capacity
     investment as opposed to making those decisions independently of their competitors.
     There is no efficiency that can be shared with the shipper customers arising from co-
     ordinated future capacity investment and planning alone. Benefits from capacity planning
     can only be enjoyed where the lines concerned belong to a consortium providing a joint
     service. Where lines are competing with each other apart from on the question of future



                                                                                             14
       capacity investment, the only possible effect on the market is to allow the lines to provide
       their services at above competitive prices.

31     The ELAA's real intentions in asking the Commission to sanction exchange of information
       on future capacity is clear from the original nature of the ELAA's revised proposal:

       −       carriers would enter in a separate spreadsheet their individual current and
               forecast capacity per trade and submit to the Independent Data Service (IDS).

       −       the forecast input would be made quarterly, historically and for quarterly periods
               over the next 18 months.

       −       data is by each carrier on the basis of which vessels are going to be deployed by
               that carrier on the trade (not port-pairs). The capacity figure would come from
               the nominal quarterly capacity of the vessels to be deployed.

       −       final forecast report by IDS would be aggregated data from all carriers.

       −       safeguards to ensure data cannot be disaggregated.

       −       all data publicly available.

32     The effect of encouraging the adoption of a common policy by all carriers with regard to
       capacity investment is further re-enforced by the ensuing carrier-only discussions which
       the guidelines purport to permit in paragraph 60.

Carrier-only meetings

33     In the first sentence of paragraph 60 of the draft Guidelines, the Commission correctly
       states:

       -        "In liner shipping, for example, carrier-only meetings convened to discuss recent
       and detailed data violate Article 81(1) of the Treaty where they eliminate rivalry between
       the parties to the exchange".

34     In the context of either the forecasts on the supply situation going forward based on the
       announcements by lines about the purchase and delivery of new vessels, albeit in the
       public domain, or in the context of a price index showing average price movements for
       the transport of a sea container, the purpose and effect of carrier-only discussions can
       only be to lead to the adoption of a common policy by all carriers with the aim and result
       of providing services at above-competitive prices. In particular, this was recognised by
       the Commission in its Issues Paper at paragraphs 61 and 62 in the case of future
       capacity forecasts and carrier-only discussion meetings.

Consequences for text

35     Consequently, the second sentence of paragraph 60 suggesting that Article 81(3) could
       apply to the specific circumstances of the first sentence of paragraph 60 (above), outside



                                                                                                15
       a consortium, should be deleted (as already proposed in the interest of clarifying the
       scope of the guidelines).

36     Similarly, the reference to "publicly available market information" should be deleted from
       paragraph 60, third and final sentence, to ensure that the purpose of the exchange can
       be taken into account properly in the assessment under Article 81(1), as already
       proposed above.

Market characteristics relevant to information exchange

37     The guidelines fail to explain fully the importance of the relevant market characteristics of
       an information exchange, including the existing links between the participants and the
       documentary evidence of their future intentions to continue their past practices in draft
       proposals for information exchanges.

38     Amendments need to be made to the text to clarify that:

       (a)     recent volume and capacity information exchange should not be permitted by
               lines already exchanging information in consortia;

       (b)     price index of average prices should not be permitted by lines which have been
               in the habit of fixing prices in a liner conference tariff and exchanging individual
               price data in a liner conference cartel.

39     In paragraph 49 of the draft guidelines, the Commission recognises the importance of the
       characteristics of the relevant market in the context of market structure. In particular, it
       refers to the existence of any structural links between competitors as being important in
       the context of market structure. However, when the Commission comes to assess under
       Article 81(1) the exchanges of recent data on volume and capacity (paragraph 55) and
       the price index based on appropriately aggregated price data (paragraph 57), it does not
       appear to refer to the importance of the relevant market characteristics such as the
       links between competitors.

Consequences for text

40     Consequently, it would make sense if the Commission inserted the text of footnote 52
       into the body of the text of paragraph 49 and replaced the text of footnote 52 with a
       reference to paragraph 7 of the recitals of Council Regulation 1419/2006.

41     Paragraph 49: insert text of footnote 52: "In liner shipping there are operational and/or
       structural links between competitors, for example, membership of consortia agreements
       that allow shipping lines to share information for the purposes of providing a joint service.
       The existence of any such link, will have to be taken into account on a case by case
       basis when assessing the impact an additional exchange of information has in the market
       in question." (Emphasis added)

42     Footnote 52: insert:




                                                                                                 16
        "See Council Regulation 1419/2006, OJ 2006 L269/1 at paragraph 7 of the recitals:
        "…carriers participate in conferences and consortia on the same trade, exchanging
        commercially sensitive information… Given the increasing number of links between
        carriers in the same trade…"

Volume and capacity

43      Having indicated that in past cases the Commission has considered information
        which was more than one year old as historic whereas information less than one year
        old has been viewed as recent (paragraph 53), it is surprising that it concludes in the last
        sentence of paragraph 55 that:

        "Exchanges of recent data on volume and capacity are similarly unlikely to be restrictive
        of competition if data is aggregated to an appropriate level such that individual shippers'
        or carriers' transactions cannot be identified either directly or indirectly." (emphasis
        added)

44      There is no authority for the conclusion that the Commission makes in paragraph 55.
        Bearing in mind the discussion above regarding structural links between shipping lines
        and the exchange of information in consortia, this unqualified positive statement must be
        questionable under Article 81(1). Furthermore, there exist numerous trades where no
        amount of aggregation of the data could hide the identity of a shipper where that shipper
        has a significant proportion of the total volume on that trade route. Accordingly, it is
        recommended that the last sentence of paragraph 55 be deleted to avoid further disputes
        in the European or national courts. The Commission is not in a position without
        carrying out a full economic analysis to determine how the market characteristics
        would impact on any given exchange of recent data on volume and capacity,
        however aggregated it may be. Similar considerations apply to the Commission's
        conclusion in paragraph 57 regarding a price index based on appropriately aggregated
        price data. This is considered below.

Price index of average prices

45      The draft Guidelines define a price index as follows:

        "In liner shipping, the price index shows average price movements for the transport of a
        sea container."

46      ESC is unaware of the existence of any price index, as defined, to date. The lines in liner
        conference cartels have been able to discuss and fix prices so a price index would not
        have been of any assistance to their anti-competitive business practices. For this reason,
        any price index will have the effect of reducing shipping lines uncertainty as to the future
        attitude of competitors. As the Commission indicates rightly that this would violate Article
        81(1) of the Treaty, it is difficult to understand why the Commission suggests that a price
        index based on information that cannot be disaggregated will not, even so, be used by
        the shipping lines to align themselves on a common price level reflecting the trends in the




                                                                                                 17
      index. In particular, the index figure provides price signals for shipping lines in
      individual negotiations with shippers.

47    In the ESC's view, the second sentence of paragraph 57 of the draft Guidelines
      should be deleted: "A price index based on appropriately aggregated price data is
      unlikely to infringe Article 81(1) of the Treaty, provided the level of aggregation is
      such that the information cannot be disaggregated so as to allow undertakings
      directly or indirectly to identify the competitive strategies of their competitors."

Conclusions

48    It follows, therefore, that the attached amendments (annex 2) should be made to the
      Commission's draft Guidelines to ensure that they do not raise questions of their
      compatibility with Article 81(1) or Article 81(3).




                                                                                         18
                                               ANNEX I


    A possible scenario, post October 2008, if the “Guidelines are left too “permissive”.


Setting : North Europe / “Paradise Land” trade

A small-to-medium trade (600 000 teus annualised capacity, both ways) i.e. does not qualify as a
“thin trade” as per ELAA (below 150,000 teus/year in both directions)

One consortium, “X”, (carriers A,B,C,D), roughly 50% of the deployed capacity,

One major single operator (E), roughly 40% of deployed capacity

Both weekly services

10% capacity left, shared among 3 services (every 10 days, fortnightly and every 2 months)
Modest trade growth of 4 to 5%, in both directions, year after year.


Nature of data exchanged in the Liner Shipping Association

Every month, all operators lodge to the independent data service (IDS) their volumes per port
pairs, northbound and southbound and their average rate per type of equipment (20’, 40’, Reefer
box). The IDS collates the data, and 8 weeks after the end of the concerned month sends out a
report on the total trade to each participant, together with their respective individual input, so that
each participant may calculate its own market share.

As there are a limited number of commercial operators of similar service quality (5) and 2 main
operating blocs, market shares tend to be stable and comparable with the ratios of deployed
capacity, as capacity is well utilised in both directions. Little, if any, in-fighting among trade
participants exists to enlarge customer portfolios.

Every quarter, all participants submit to the IDS their individual forecast capacity on an 18 month
rolling-forward basis. Operators in leading consortium “X”, which have a block exemption, legally
coordinate their capacity planning and decide to restrict their capacity growth to 2% over the
coming 2 years. Carrier “E”, meanwhile, decides to follow trade growth and plans a capacity
upgrade of 5% for the same period. The IDS distributes, every quarter, to all participants in this
trade the aggregated capacity forecast figure, and carrier “E” by difference with his own input can
immediately calculate that consortium “X” has taken a more conservative view of trade
development.

Meanwhile, based on the carriers’ input to the “Black Box”, a price index is issued monthly with a
delay of 3 months showing quarterly rolling-forward price developments on a trade/directional
basis.

Six months down the line, all carriers notice that the total trade is indeed growing by 5% on an
annualised basis. Carrier “E” notices that over the past 2 quarterly supply forecast reports he
received, the total supply figure did not change, meaning consortium “X” remains on a path of
tightening capacity, as he, himself, has not changed his parameters, and the 3 marginal carriers
representing 10% of total capacity have an insignificant impact on the overall picture. Indeed,
sightings of the new ships phased –in by consortium “X” confirm that they not only forecast only
2% more capacity deployment, but they also stick to their word.




                                                                                                     19
The consequences

Six iterations of the pricing index take place, which, though not detailed on a per box type/port-
pair basis, indicate an edging up of the average rate level. Comparing the slope of his own rate
development curve with the generic one, carrier “E” can draw conclusions as to what he needs to
do next. It would be more than likely the decision of carrier “E” will be to reduce its own capacity
growth and raise the rate.


Conclusion

It would be a relatively simple calculation to determine what one’s main competitors were doing
with regard to supply and price. The judgement of a carrier on such a typical trade would be to
shadow one’s competitors, effectively and deliberately reducing competition on price.

Stable prices, created by the careful co-ordination of supplying capacity, removes the incentive
for a carrier to alter their business strategy or differentiate their service. The shipper remains a
hostage to the services and service levels offered even though their service needs may
themselves be changing due to competition in their particular industry.

The ESC believes that the following trade-lanes are among those where this scenario described
might readily occur once the conferences have been disbanded:

    -   Europe-West Africa,
    -   Europe-South Africa,
    -   Europe-West Coast South America
    -   Europe-Australia
    -   Europe-East Coast South America




                                                                                                       20
                                             ANNEX II


Guidelines on the application of Article 81 of the EC Treaty to maritime transport
services — Draft Text with EEA relevance

Official Journal C 215 , 14/09/2007 P. 0003 - 0015


20070914
Guidelines on the application of Article 81 of the EC Treaty to maritime transport services
Draft
(Text with EEA relevance)
(2007/C 215/03)
1. Introduction
1. These Guidelines set out the principles that the Commission of the European
Communities will follow when defining markets and assessing cooperation agreements in
the maritime transport services sectors directly affected by the changes brought about by
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 (now 81 and
82) 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 [1].
2. They are intended to help undertakings and associations of undertakings operating those
services to and/or from a port or ports in the European Union to assess whether their
agreements [2] are compatible with Article 81 of the Treaty establishing the European
Communities. The Guidelines do not apply to other sectors.
3. Regulation (EC) No 1419/2006 extended the scope of Council Regulation (EC) No 1/2003
of 16 December 2002 on the implementation of the rules on competition laid down in Articles
81 and 82 of the EC Treaty [3] and Commission Regulation (EC) No 773/2004 of 7 April
2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and
82 of the EC Treaty [4] to include cabotage and tramp vessel services. As of 18 October
2006, all maritime transport services sectors are subject to the generally applicable
procedural framework.
4. Regulation (EC) No 1419/2006 also repealed Council Regulation (EEC) No 4056/1986 of
22 December 1986 on the application of Articles 85 and 86 (now 81 and 82) of the EC
Treaty to maritime transport [5] containing the liner conference block exemption which
allowed shipping lines meeting in liner conferences to fix rates and other conditions of
carriage, as the conference system no longer fulfilled the criteria of Article 81(3) of the
Treaty. The repeal of the block exemption takes effect as of 18 October 2008. Thereafter,
liner carriers operating services to and/or from a port(s) in the European Union must cease
all liner conference activity contrary to Article 81 of the Treaty. This is the case regardless of
whether other jurisdictions allow, explicitly or tacitly, rate fixing by liner conferences or
discussion agreements.
5. These Guidelines complement the guidance already issued by the Commission. As
maritime transport services are characterised by extensive cooperation agreements
between competing carriers, the Guidelines on the applicability of Article 81 of the EC Treaty
to horizontal cooperation agreements [6] (the Guidelines on Horizontal Cooperation) and the
Guidelines on the application of Article 81(3) of the Treaty [7] are particularly relevant.
6. Horizontal cooperation agreements in liner shipping regarding the provision of joint
services are covered by Commission Regulation (EC) No 823/2000 of 19 April 2000 on the
application of Article 81(3) of the Treaty to certain categories of agreements, decisions and
concerted practices between liner shipping companies (consortia) [8]. It sets out the



                                                                                                     21
conditions, pursuant to Article 81(3) of the Treaty, under which the prohibition in Article 81(1)
of the Treaty does not apply to agreements between two or more vessel operation carriers
(consortia). It will be reviewed following the changes introduced by Regulation (EC) No
1419/2006 [9].
7. These Guidelines are without prejudice to the interpretation of Article 81 of the Treaty
which may be given by the Court of Justice or the Court of First Instance of the European
Communities. The principles in the Guidelines are to be applied in the light of the
circumstances specific to each case.
8. The Commission will apply these guidelines for an initial period of five years.
2. Maritime transport services
2.1. Scope
9. Liner shipping services, cabotage and tramp vessel services are the maritime transport
sectors directly affected by the changes brought about by Regulation (EC) No 1419/2006.
10. Liner shipping involves the transport of cargo, chiefly by container, on a regular basis to
ports of a particular geographic route, generally known as a trade. Other general
characteristics of liner shipping are that timetables and sailing dates are advertised in
advance and services are available to any transport user. Article 1(3)(a) of Regulation (EEC)
No 4056/86 defined tramp vessel services as the transport of goods in bulk or in break-bulk
in a vessel chartered wholly or partly to one or more shippers on the basis of a voyage or
time charter or any other form of contract for non-regularly scheduled or non-advertised
sailings where the freight rates are freely negotiated case by case in accordance with the
conditions of supply and demand. It is mostly the unscheduled transport of one single
commodity which fills a vessel [10]. Cabotage involves the provision of maritime transport
services including tramp and liner shipping, linking two or more ports in the same Member
State [11]. Although these Guidelines do not specifically address cabotage services they
nevertheless apply to these services insofar as they are provided either as liner or tramp
shipping services.
2.2. Effect on trade between Member States
11. Article 81 of the Treaty applies to all agreements which may affect trade between
Member States. In order for there to be an effect on trade it must be possible to foresee with
a sufficient degree of probability on the basis of a set of objective factors of law or fact that
the agreement or conduct may have an influence, direct or indirect, actual or potential, on
the pattern of trade between Member States, such as might prejudice the realisation of the
aim of a single market [12]. The Commission has issued guidance on how it will apply the
concept of affectation of trade in its Guidelines on the effect of trade concept contained in
Articles 81 and 82 of the Treaty [13].
12. Transport services offered by liner shipping and pool operators are often international in
nature linking Community ports with third countries and/or involving exports and imports
between two or more Member States (i.e. intra Community trade) [14]. In most cases they
are likely to affect trade between Member States inter alia on account of the impact they
have on the markets for the provision of transport and intermediary services [15].
13. Effect on trade between Member States is of particular relevance to maritime cabotage
services insofar as it also determines the scope of application of Article 3 of Regulation (EC)
No 1/2003 on the implementation of the rules on competition laid down in Articles 81 of the
Treaty. The extent to which such services may affect trade between Member States must be
evaluated on a case by case basis [16].
2.3. The relevant market
14. In order to assess the effects on competition of an agreement for the purposes of Article
81 of the Treaty, it is necessary to define the relevant product and geographic market(s).
The main purpose of market definition is to identify in a systematic way the competitive
constraints faced by an undertaking. Guidance on this issue can be found in the
Commission Notice on the definition of the relevant market for the purposes of Community



                                                                                                    22
competition law [17]. This guidance is also relevant to market definition as regards maritime
transport services.
15. The relevant product market comprises all those products and/or services which are
regarded as interchangeable or substitutable by the consumer, by reason of the products'
characteristics, their prices and their intended use [18]. The relevant geographic market
comprises the area in which the undertakings concerned are involved in the supply and
demand of products or services, in which the conditions of competition are sufficiently
homogeneous and which can be distinguished from neighbouring areas because the
conditions of competition are appreciably different in those areas [19]. Carrier(s) cannot
have a significant impact on the prevailing conditions of the market if customers are in a
position to switch to other service providers, in the short term, in response to small and
permanent changes in the relative price without incurring significant additional costs or risks
[20].
2.3.1. Liner shipping
16. Containerised liner shipping services have been identified as the relevant product
market for liner shipping in several Commission decisions and Court judgments [21]. Other
modes of transport have not been included in the same service market even though in some
cases these services may be, to a marginal extent, interchangeable. This is because a
substantial proportion of the goods carried by container cannot easily be switched to other
modes of transport, such as air transport services [22].
17. It may be appropriate under certain circumstances to define a narrower product market
limited to a particular type of product transported by sea. For example, the transport of
perishable goods could be limited to reefer containers or include transport in conventional
reefer vessels [23]. While it is possible in exceptional circumstances for some substitution to
take place between break bulk and container transport [24], there appears to be no lasting
change over from container towards bulk. For the vast majority of categories of goods and
users of containerised goods, break bulk does not offer a reasonable alternative to
containerised liner shipping [25]. Once cargo becomes regularly containerised it is unlikely
ever to be transported again as non-containerised cargo [26]. Containerised liner shipping is
therefore mainly subject to one way substitutability [27].
18. The relevant geographic market consists of the area where the services are marketed,
generally a range of ports at each end of the service [28]. As far as the European end of the
service is concerned, to date the geographical market has been identified as a range of
ports in Northern Europe and/or in the Mediterranean. As liner shipping services from the
Mediterranean are only marginally substitutable for those from Northern European ports,
these have been identified as separate markets [29].
2.3.2. Tramp services
19. The Commission has not yet applied Article 81 of the Treaty to tramp shipping.
Undertakings may consider the following elements in their assessment inasmuch as they
are relevant to the tramp shipping services they provide.
Elements to take into account when determining the relevant product market from the
demand-side (demand substitution)
20. The "main terms" of an individual transport request are a starting point for defining
relevant service markets in tramp shipping since they generally identify the essential
elements [30] of the transport requirement at issue. Depending on the transport users'
specific needs they will be made up of negotiable and non-negotiable elements. Once
identified, a negotiable element of the main terms, for example the vessel type or size, may
indicate, for instance, that the relevant market with respect to this specific element is wider
than laid down in the initial transport requirement.
21. The nature of the service in tramp shipping may differ and there is a variety of transport
contracts. It may be necessary, therefore, to ascertain whether the demand-side considers
the services provided under time charter contracts, voyage charter contracts and contracts



                                                                                                  23
of affreightment (CoAs) to be substitutable. Should this be the case they may belong to the
same relevant market.
Elements to take into account when determining the relevant product market from the
supply-side (supply substitution)
22. The physical and technical conditions of the cargo to be carried and the vessel type
provide the first indications as to the relevant market from the supply-side [31]. If vessels
can be adjusted to transport different cargos at negligible cost and in a short time-frame [32],
tramp shipping service providers are able to compete for the transport of several types of
cargo. In such circumstances, the relevant market will comprise more than one type of
cargo.
23. However, there are a number of vessel types that are technically adapted and/or
specially built to provide specialised transport services. Although specialised vessels may
also carry other types of cargo, they are generally at a competitive disadvantage. The ability
of specialised service providers to compete in other markets may, therefore, be limited.
24. Vessel types are usually subdivided into a number of standard industrial sizes [33]. In
normal market conditions, due to considerable economies of scale, a service with a
significant mismatch between cargo volume and vessel size does not appear to be able to
offer a competitive freight rate. In addition, substitutability of vessel sizes may be limited by
draught restrictions in ports and canals. In general therefore, the substitutability of different
vessel sizes needs to be assessed so as to ascertain whether each vessel size constitutes a
separate relevant market.
25. The existence of chains of substitution between vessel sizes in tramp shipping should
also be considered. In certain tramp shipping markets, vessel sizes at the extreme of the
market are not directly substitutable. Chain substitution effects may nevertheless constrain
pricing at the extremes and lead to their inclusion in a broader market definition.
26. In certain tramp shipping markets, consideration must be given to whether vessels can
be considered as captive capacity and should not be taken into account when assessing the
relevant market.
27. Additional factors such as the reliability of the service provider, security, safety and
regulatory requirements may influence supply and demand-side substitutability, for example
the double hull requirement for tankers in Community waters.
Geographic dimension
28. Transport requirements usually contain geographic elements such as the loading and
discharging ports or regions. These ports provide the first orientation for the definition of the
relevant geographic market from the demand-side.
29. In tramp shipping, ports are generally substitutable from the supply-side as services are
not scheduled but respond to a specific demand. Substitutability of ports may be limited by
restrictions on vessel mobility such as terminal and draught restrictions or environmental
standards for particular vessel types in certain ports or regions.
30. Repositioning of vessels, ballast voyages and trade imbalances should be taken into
account for the delineation of relevant geographic markets. Certain geographic markets may
be defined on a directional basis or may occur only temporarily for instance when climatic
conditions or harvest periods periodically affect the demand for transport of particular
cargos.
2.4. Calculation of Market share
31. In liner shipping, volume and/or capacity data have been identified as the basis for
calculating market shares in several Commission decisions and Court judgments [34].
32. In tramp shipping markets, service providers compete for the award of transport
contracts, that is to say, they sell voyages. Depending on the specific services in question,
the various data may allow operators to calculate their annual market shares [35] for
instance:



                                                                                                    24
(a) the number of voyages;
(b) the parties' volume or value share in the overall transport of a specific cargo;
(c) the parties' share in the market for time charter contracts;
(d) data in relation to the parties' contract negotiations;
(e) the parties' capacity shares in the relevant fleet (by vessel type and size) [36].
3. Horizontal agreements in the maritime transport sector
33. Cooperation agreements are a common feature of maritime transport markets.
Considering that these agreements may be entered into by actual or potential competitors
and may adversely affect the parameters of competition, undertakings must take special
care to ensure that they comply with the competition rules. In service markets, such as
maritime transport, the following elements are particularly relevant for the assessment of the
effect an agreement may have in the relevant market: prices, costs, quality, frequency and
differentiation of the service provided, innovation, marketing and commercialisation of the
service.
34. Three issues are of particular relevance to the services covered by these guidelines:
technical agreements, exchanges of information and pools.
3.1. Technical agreements
35. Certain types of technical agreements may not fall under the prohibition set out in Article
81 of the Treaty on the ground that they do not restrict competition. This is the case, for
instance, of horizontal agreements the sole object and effect of which is to implement
technical improvements or to achieve technical cooperation. Agreements relating to the
implementation of environmental standards can also be considered to fall into this category.
Agreements between competitors relating to price, capacity, or other parameters of
competition will, in principle, not fall into this category [37].
3.2. Information exchanges between competitors in liner shipping
36. An information exchange system entails an arrangement on the basis of which
undertakings exchange information amongst themselves or supply it to a common agency
responsible for centralizing, compiling and processing it before returning it to the participants
in the form and at the frequency agreed.
37. It is common practice in many industries for aggregate statistics and general market
information to be gathered, exchanged and published. This published market information is
a good means to increase market transparency and customer knowledge, and thus may
produce efficiencies. However, the exchange of commercially sensitive and individualised
market data can, under certain circumstances, breach Article 81 of the Treaty. These
guidelines are intended to assist providers of liner shipping services in assessing when such
exchanges breach the competition rules.
38. In the liner shipping sector, exchanges of information between shipping lines taking part
in liner consortia which otherwise would fall under Article 81(1) of the Treaty are permitted to
the extent that they are ancillary to and necessary for the joint operation of liner transport
services and the other forms of co-operation covered by the block exemption in Commission
Regulation (EC) No 823/2000 [38] or irrespective and outside. Outside the scope of the
block exemption, if and to the extent that they can be individually justified on the basis of
Article 81 of the Treatyguidance on application of Article 81(3) of the Treaty is to be
found in the general notice on the subject.
3.2.1. In general
39. In assessing information exchange systems under Community competition law, the
following distinctions must be made.
40. The exchange of information may be a facilitating mechanism for the implementation of
an anti-competitive practice, such as monitoring compliance with a cartel. Where an
exchange of information is ancillary to an anti-competitive practice its assessment must be



                                                                                                    25
carried out in combination with an assessment of that practice. These Guidelines do not
address such exchanges of information.
41. However, an exchange of information might constitute an infringement of Article 81 of
the Treaty in its own right. This situation arises when the information exchange reduces or
removes the degree of uncertainty as to the operation of the market in question with the
result that competition between undertakings is restricted [39].
42. Where there is a truly competitive market, transparency between traders is likely to lead
to intensification of competition between suppliers [40]. Furthermore, it is settled case-law
that Article 81 of the Treaty does not prevent undertakings from adapting themselves
intelligently to the existing or anticipated conduct of competitors [41].
43. Every economic operator must, however, determine autonomously the policy which it
intends to pursue on the market. Undertakings are, therefore, precluded from direct or
indirect contacts with other operators which influence the conduct of a competitor or reveal
their own (intended) conduct if the object or effect of those contacts is to give rise to
conditions of competition which do not correspond to the normal conditions of the market in
question, taking into account the nature of the products or the services provided, the size
and number of the undertakings and the volume of the market [42].
44. The case law of the Community Courts provides some general guidance in examining
the likely effects of an information exchange. The Court has found that, on a highly
concentrated oligopolistic market on which competition is already greatly reduced,
exchanges of precise information on individual sales at short intervals between the main
competitors, to the exclusion of other suppliers and of consumers, are likely to impair
substantially the competition that exists between traders. In such circumstances, the
sharing, on a regular and frequent basis, of information concerning the operation of the
market has the effect of periodically revealing to all competitors the market positions and
strategies of the various individual competitors [43]. The Court of Justice has also found that
an information exchange system may constitute a breach of the competition rules even
when the market is not highly concentrated but there is a reduction of the undertakings'
decision making autonomy resulting from pressure during subsequent discussions with
competitors [44]. By contrast, the Court has found that a system of quarterly price
announcements that did not lessen each undertakings uncertainty as to the future attitude of
its competitors did not constitute an infringement of Article 81(1) of the Treaty [45].
45. It follows that the actual or potential effects of an information exchange must be
considered on a case-by-case basis as the results of the assessment depend on a
combination of factors, each specific to an individual case. The structure of the market
where the exchange takes place and the characteristics of the information exchange, are
two key elements that the Commission examines when assessing an information exchange.
The assessment must also consider the potential effects that the information exchange
could have in the market compared to the competitive situation that would result in the
absence of the information exchange agreement [46]. To be caught by Article 81(1) of the
Treaty, the exchange must have an appreciable adverse impact on the parameters of
competition [47].
46. The guidance below is related to the analysis of a restriction of competition under Article
81(1) of the Treaty. Guidance on the application of Article 81(3) of the Treaty is to be found
in the general notice on the subject [48].
3.2.2. Market structure
47. The level of concentration and the structure of supply and demand on a given market
are key issues in considering whether an exchange falls within the scope of Article 81(1) of
the Treaty [49].
48. The level of concentration is particularly relevant since, on highly concentrated
oligopolistic markets [50], restrictive effects are more likely to occur and are more likely to be
sustainable than in less concentrated markets. Greater transparency in a concentrated




                                                                                                     26
market may strengthen the interdependence of firms and reduce the intensity of competition
[51].
49. The structure of supply and demand is also important, notably the number of competing
operators and the symmetry and stability of their market shares and the existence of any
structural links between competitors: In liner shipping there are operational and/or
structural links between competitors, for example membership of consortia
agreements that allow shipping lines to share information for the purposes of
providing a joint service. The existence of any such link, will have to be taken into
account on a case by case basis when assessing the impact an additional exchange
of information has in the market in question [52]. The Commission may also analyse
other factors such as the homogeneity of services and the overall transparency in the
market.
3.2.3. Characteristics of the information exchanged
50. The pure exchange of information already in the public domain does not in principle
constitute an infringement of Article 81(1) of the Treaty [53]. However, it is important to
establish whether the exchange of information enhances and/or combines publicly available
information with other information rendering the combined information commercially
sensitive and its exchange potentially restrictive of competition.
51. Information which is not historic and relates to parameters of competition, such as price,
capacity or costs will be considered commercially sensitive. The exchange of such data
between competitors is more likely to be caught by Article 81(1) of the Treaty than the
exchange of information that is commercially less sensitive.
52. Information may be individual or aggregated. Individual data relates to a designated or
identifiable undertaking. Aggregate data combines the data from a sufficient number of
independent undertakings so that the recognition of individual data is impossible. The
exchange of individual information between competitors is more likely to be caught by Article
81(1) of the Treaty [54] when it relates to commercially sensitive data. The exchange of
aggregated information does not, in principle, fall within Article 81(1) of the Treaty. The
Commission will pay particular attention to the level of aggregation. It should be such that
the information cannot be disaggregated so as to allow undertakings directly or indirectly to
identify the competitive strategies of their competitors.
53. The age of the data and the period to which it relates are also important factors. Data
can be historic, recent or future. Exchange of historic information is generally not regarded
as falling within Article 81(1) of the Treaty because it cannot have any real impact on the
undertaking's future behaviour. In past cases, the Commission has considered information
which was more than one year old as historic [55] whereas information less than one year
old has been viewed as recent [56]. The historic or recent nature of the information should
be assessed with some flexibility taking into account the extent to which data becomes
obsolete in the relevant market. Future data relates to an undertaking's view of how the
market will develop or to the strategy it intends to follow in that market. The exchange of
future data is particularly likely to be problematic, especially when it relates to prices or
output. It may reveal the commercial strategy an undertaking intends to adopt in the market.
In so doing, it may appreciably reduce rivalry between the parties to the exchange and is
thus potentially restrictive of competition.
54. The frequency of the exchange should also be considered. The more frequently the data
is exchanged, the more swiftly competitors can react. This facilitates retaliation and
ultimately lowers the incentives to initiate competitive actions on the market. So-called
hidden competition could be restricted.
55. In liner shipping, for example, exchanges of historic data on volume and capacity, even
on a disaggregated basis, are unlikely to be restrictive of competition; whether data can be
considered historic must be determined by the effect its disclosure is likely to have on the
relevant market. The time when the data becomes historic is likely to be shorter if the data is
aggregated rather than individual. Exchanges of recent data on volume and capacity are



                                                                                                  27
similarly unlikely to be restrictive of competition if the data is aggregated to an appropriate
level such that individual shippers' or carriers' transactions cannot be identified either directly
or indirectly.
56. Conversely, caution should be used when assessing exchanges of capacity forecasts
not based on generally publicly available data, even in aggregate form, especially when it
takes place in concentrated markets. In liner markets, capacity data is the key parameter to
coordinate competitive conduct and it has a direct effect on prices. Aggregated capacity
forecasts indicating in which trades capacity will be deployed may be anticompetitive to the
extent that they may lead to the adoption of a common policy by several or all carriers and
result in the provision of services at above competitive prices. Additionally, there is a risk of
disaggregation of the data as it can be combined with individual announcements by liner
carriers. This would enable undertakings to identify the market positions and strategies of
competitors.
57. In liner shipping, a price index shows average price movements for the transport of a
sea container. A price index based on appropriately aggregated price data is unlikely to
infringe Article 81(1) of the Treaty, provided that the level of aggregation is such that the
information cannot be disaggregated so as to allow undertakings directly or indirectly to
identify the competitive strategies of their competitors. If a price index has the effect of
reducing carriers' uncertainty as to the future attitude of competitors, it would violate Article
81(1) of the Treaty. In assessing the likely effect of such a price index on a given relevant
market, account should be given to the level of aggregation of the data and its historical or
recent nature and the frequency at which the index is published. It is also important to
assess all individual elements of any information exchange scheme together, in order to
take account of potential interactions, for example between exchange of capacity and
volume data on the one hand and of a price index on the other.
58. An exchange of information between carriers that restricts competition may nonetheless
create efficiencies, such as, better planning of investments and more efficient use of
capacity. Such pro. Pro-competitive benefits will have to be passed on to customers and
weighed against the anti-competitive effects of the information exchange in the framework of
Article 81(3) of the Treaty. In this context, it is important to note that one of the conditions of
Article 81(3) of the Treaty is that consumers should receive a fair share of the benefits
generated by the restrictive agreement. If all four cumulative conditions set out in Article
81(3) of the Treaty are fulfilled, the prohibition of Article 81(1) of the Treaty does not apply
[57].
3.2.4. Availability of the information and institutional structure
59. The more the information is shared with customers, the less likely it is to be problematic.
If market transparency is improved for the benefit of suppliers only, it may deprive customers
of the possibility of getting the advantage of increased "hidden competition". An exchange
between suppliers only may also constitute a barrier to entry.
60. In liner shipping, for example, carrier only meetings convened to discuss recent and
detailed data violate Article 81(1) of the Treaty where they eliminate rivalry between the
parties to the exchange. In this case, participants to the exchange would have to
demonstrate that it fulfils the four cumulative conditions of Article 81(3) of the Treaty. This
situation should be distinguished from the discussions legitimately conducted within a trade
association, for example, on the basis of publicly available market information, or on
technical and environmental standards.
3.3. Pool agreements in tramp shipping
61. The most recurrent form of horizontal cooperation in the tramp shipping sector is the
shipping pool. There is no universal model for a pool. Some features do, however, appear to
be common to all pools in the different market segments as set out below.
62. A standard shipping pool brings together a number of similar vessels [58] under different
ownership and operated under a single administration. A pool manager is normally
responsible for the commercial management (for example, joint marketing [59], negotiation



                                                                                                      28
of freight rates and centralization of incomes and voyage costs [60]) and the commercial
operation (planning vessel movements and instructing vessels, nominating agents in ports,
keeping customers updated, issuing freight invoices, ordering bunkers, collecting the
vessels' earnings and distributing them under a pre-arranged weighting system etc.). The
pool manager often acts under the supervision of a general executive committee
representing the vessel owners. The technical operation of vessels remains the
responsibility of each owner (safety, crew, repairs, maintenance etc.). Although they market
their services jointly, the pool members perform the services individually.
63. It follows from this description that the key feature of standard shipping pools is joint
selling, coupled with some features of joint production. The guidance on both joint selling, as
a variant of a joint commercialisation agreement, and joint production in the Commission
Guidelines on the applicability of Article 81 of the Treaty to horizontal cooperation
agreements [61] is therefore relevant. However, given the variation in pools' characteristics,
each pool must be analysed on a case-by-case basis to determine whether it is caught by
Article 81(1) of the Treaty and, in the affirmative, if it fulfils the four cumulative conditions of
Article 81(3) of the Treaty.
64. Pools that fall within the scope of Council Regulation (EC) No 139/2004 [62] because
they are created as a joint venture performing on a lasting basis all the functions of an
autonomous economic entity (so called full-function joint ventures, see Article 3(4) of Council
Regulation (EC) No 139/2004) are not directly affected by the changes brought about by
Regulation (EC) No 1419/2006. Guidance on the relevant issues can be found, inter alia, in
the Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No
139/2004 on the control of concentrations between undertakings [63]. Insofar as such pools
have as their object or effect the coordination of the competitive behaviour of their parents,
the coordination shall be appraised in accordance with the criteria of Article 81(1) and (3) EC
with a view to establishing whether or not the operation is compatible with the common
market [64].
3.3.1. Pools that do not fall under Article 81(1) of the Treaty
65. Pool agreements do not fall under the prohibition of Article 81(1) of the Treaty if the
participants to the pool are not actual or potential competitors, or are competing companies
that cannot by any means provide the service(s) covered by the agreement individually. This
would be the case, for instance, when two or more ship-owners set up a shipping pool for
the sole purpose of tendering for and providing CoAs for which as individual operators they
could not bid successfully or which they could not carry out on their own. In practice,
however, pools may often not assign all their ships to CoAs since engaging all the pool's
ships in one sole type of contract could result in other opportunities for maximising revenue
being lost, hence invalidating the purposes for which pools are usually set up.
66. Pools whose activity does not influence the relevant parameters of competition because
they are of minor importance and/or do not appreciably affect trade between Member States
[65], are not caught by Article 81(1) of the Treaty. For the former criterion to apply the pool in
question cannot contain provisions regarding joint price fixing and joint marketing. As for the
latter criterion, considering the nature of transport services offered by pools they are likely to
affect trade between Member States [66].
3.3.2. Pools that generally fall under Article 81(1) of the Treaty
67. If a pool agreement between competitors has as its object the restriction of competition
by means of price fixing, output limitation or sharing of markets or customers it will fall under
Article 81(1) of the Treaty. Agreements between competitors involving price fixing [67] will
always fall under Article 81(1) of the Treaty irrespective of the market power of the parties
[68].
3.3.3. Pools that may fall under Article 81(1) of the Treaty
68. If the pool does not have as its object a restriction of competition, an analysis of its
effects in the market concerned is necessary. An agreement is caught by Article 81 (1) of
the Treaty when it is likely to have an appreciable adverse impact on the parameters of



                                                                                                       29
competition on the market such as prices, costs, service differentiation, service quality, and
innovation. Agreements can have this effect by appreciably reducing rivalry between the
parties to the agreement or between them and third parties [69].
69. The pool's ability to cause appreciable negative market effects depends on the economic
context, taking into account the nature of the agreement and the parties' combined market
power together with other structural factors in the relevant market. It must also be
considered whether the pool agreement affects the behaviour of the parties in neighbouring
markets closely related to the market directly affected by the cooperation [70]. This may be
the case for example where the pool's relevant market is that for the transport of cars in
specialised car carrier vessels (market A) and the pool's members also operate ships in the
ro-ro market (market B).
70. Concerning the nature of the agreement consideration should be given to whether the
pool agreement contains clauses prohibiting members from being active in the same market
outside the pool and the extent to which there is an exchange of commercially sensitive
information which could for example unduly influence the competitive behaviour of pool
members operating in the same market outside the pool in relation to the pool's commercial
policy. Any links between pools, whether in terms of management or members as well as
cost and revenue sharing should also be considered.
71. As regards the structural factors in the relevant market, if the pool has a low market
share, it is unlikely to produce restrictive effects. Market concentration, the position and
number of competitors the stability of market shares over time, multi-membership in pools,
market entry barriers and the likelihood of entry, market transparency, countervailing buying
power of transport users and the nature of the services (for example, homogenous versus
differentiated services) should be taken into account as additional factors in assessing the
impact of a given pool on the relevant market.
3.3.4. Applicability of Article 81(3) of the Treaty
72. Where pools are caught by Article 81(1) of the Treaty it is necessary to assess whether
they fulfil the four cumulative conditions of Article 81(3). It is up to the undertakings involved
to demonstrate that:
(a) The pool improves the transport services or promotes technical or economic progress. It
must be shown that the pool causes efficiency gains. The efficiencies generated cannot be
the saving of costs that are an inherent part of competition but must result from the
integration of economic activities. The level of the parties' contribution in terms of investment
and technology should be considered.
(b) The economic efficiencies mentioned in (a) must benefit not only the members of the
pool but also consumers in the sense that they must at least compensate the consumer for
the loss resulting from the restriction of competition. The greater the restriction of
competition, the greater must be the efficiencies and the pass on of benefits to transport
users. For example, the lower cost base could translate into lower rates and/or more flexible
terms. Pools could be a response to customer demand for a specific service.
(c) There are no less restrictive ways of achieving similar benefits.
(d) The pool must not be afforded the possibility of eliminating competition in respect of a
substantial part of the services in question.
[1] OJ L 269, 28.9.2006, p. 1.
[2] The term "agreement" is used for agreements, decisions by associations of undertakings
and concerted practices.
[3] OJ L 1, 4.1.2003, p. 1.
[4] OJ L 123, 27.4.2004, p. 18.
[5] OJ L 378, 31.12.1986, p. 4.
[6] OJ C 3, 6.1.2001, p. 2.
[7] OJ C 101, 27.4.2004, p. 97.


                                                                                                     30
[8] OJ L 100, 20.4.2000, p. 24. Regulation as last amended by Regulation (EC) No 463/2004
(OJ L 77, 13.3.2004, p. 23) and by Regulation (EC) No 611/2005 (OJ L 101, 21.4.2005, p.
10).
[9] Recital 3 of Regulation (EC) No 611/2005.
[10] The Commission has identified a series of characteristics specific to specialised
transport which render it distinct from liner services and tramp vessel services. They involve
the provision of regular services for a particular cargo type. The service is usually provided
on the basis of contracts of affreightment (CoAs) using specialised vessels technically
adapted and/or built to transport specific cargo. Commission Decision No 94/980/EC in
Case IV/34.446 — Trans-Atlantic AgreementOJ L 376, 31.12.1994, p. 1(hereinafter the TAA
Decision), paragraphs 47-49.
[11] Article 1 of Council Regulation (EEC) No 3577/92 of 7 December 1992 applying the
principle of freedom to provide services to maritime transport within Member States
(maritime cabotage) (OJ L 364, 12.12.1992, p. 7).
[12] Case 42/84 Remia BV and others v Commission [1985] ECR 2545, paragraph 22.
Moreover, the effect on inter-State trade must be appreciable, Case 319/82 Ciments et
Bétons de l'Est v Kerpen & Kerpen [1983] ECR 4173, paragraph 9.
[13] OJ C 101, 27.4.2004, p. 81.
[14] The fact that the service is to/from a non-EU port does not in itself preclude that trade
between Member States is affected. A careful analysis of the effects on customers and other
operators within the Community that rely on the services needs to be carried out to
determine whether they fall under Community jurisdiction. See Guidelines on the effect on
trade concept contained in Articles 81 and 82 of the Treaty.
[15] Commission Decision No 93/82/EEC (Cases IV/32.448, IV/32.450, IV/32.448 and
IV/32.450 CEWAL), OJ L 34, 10.2.1993, p. 1, paragraph 90, confirmed by the Court of First
Instance in Joined Cases T-24/93, T-25/93 and T-2828/93, Compagnie Maritime Belge and
others v Commission of the European Communities [1996] ECR II-1201, paragraph 205.
TAA Decision, cited above in footnote 10, paragraphs 288-296, confirmed by the Judgment
of the Court of First Instance of 28 February 2002, in Case T-395/94, Atlantic Container Line
and others v Commission (hereinafter the TAA Judgment), paragraphs 72-74; Commission
Decision No 1999/243/EC (Case IV/35.134 — Trans-Atlantic Conference Agreement)
(hereinafter the TACA Decision), OJ L 95, 9.4.1999, p. 1, paragraphs 386-396, Commission
Decision No 2003/68/EC (Case COMP/37.396/D2 — Revised TACA) (hereinafter the
Revised TACA Decision), OJ L 26, 31.1.2003, p. 53, paragraph 73.
[16] For guidance on the application of the effect on trade, see the Commission Guidelines,
cited above in footnote 13.
[17] OJ C 372, 9.12.1997, p. 5.
[18] Firms are subject to three main sources or competitive constraints: demand
substitutability, supply substitutability and potential competition. From an economic point of
view, for the definition of the relevant market, demand substitution constitutes the most
immediate and effective disciplinary force on the suppliers of a given service. The
competitive constraints arising from supply side substitutability are in general less immediate
and in any case require an analysis of additional factors. Potential competition is not taken
into account when defining markets since the conditions under which potential competition
will actually represent an effective competitive constraint depend on the analysis of specific
factors and circumstances related to the conditions of entry.
[19] Notice on market definition, cited above in footnote 17, paragraph 10.
[20] Notice on market definition, cited above in footnote 17, paragraphs 13 and 20.
[21] Commission Decision No 1999/485/EC (Case IV/34.250 — Europe Asia Trades
Agreement) (OJ L 193, 26.7.1999, p. 23); TAA Decision, cited above in footnote 10, and the
TACA Decision, cited above in footnote 15, paragraphs 60-84. The market definition in the
TACA Decision was confirmed by the Court of First Instance in its judgment in Joined Cases


                                                                                                  31
T-191/98, T-212/98 to 214/98, Atlantic Container Line AB and others v Commission [2003]
ECR II-3275, (hereinafter the TACA Judgment), paragraphs 781-883.
[22] Paragraph 62 of the TACA Decision, cited above in footnote 15 and paragraphs 783-
789 of the TACA Judgment, cited above in footnote 21.
[23] The question was left open in Commission Decision of 29 March 2004 (Case
COMP/M.3379 — P&O/Royal Nedloyd/P&O Nedloyd) (OJ C 49, 28.2.2006, p. 4); in
Commission Decision of 29 July 2005 (Case COMP/M.3829 — MAERSK/PONL), OJ C 207,
24.8.2005, p. 8 and in Commission Decision of 19 August 2005 (Case COMP/M.3798 —
NYK/Lauritzen Cool/Laucool JV) (OJ C 224, 13.9.2005, p. 4).
[24] TACA Decision, cited above in footnote 15, paragraph 71.
[25] TAA Judgement, cited above in footnote 15, paragraph 273 and TACA Judgment, cited
above in footnote 21, paragraph 809.
[26] TAA Judgment, cited above in footnote 15, paragraph 281, Commission Decision in
MAERSK/PONL, cited above in footnote 23, paragraph 13.
[27] TACA Decision, cited above in footnote 15, paragraphs 62-75; TACA Judgment, cited
above in footnote 21, paragraph 795 and Commission Decision in MAERSK/PONL, cited
above in footnote 23, paragraphs 13 and 112-117.
[28] Revised TACA Decision, cited above in footnote 18, paragraph 36.
[29] TACA Decision, cited above in footnote 15, paragraphs 76-83 and Revised TACA
Decision, cited above in footnote 15, paragraph 39.
[30] For voyage charter for instance the essential elements of a transport requirement are
the cargo to be carried, the cargo volume, the loading and discharging ports, the laydays
and technical details regarding the vessel required.
[31] For example, liquid bulk cargo cannot be carried on dry bulk vessels or reefer cargo
cannot be transported on car carriers. Many oil tankers are able to carry dirty and clean
petroleum products. However, a tanker cannot immediately carry clean products after having
transported dirty products.
[32] Switching a dry bulk vessel from the transport of coal to grain might require only a one-
day cleaning process that might be done during a ballast voyage.
[33] It appears to be the industry's perception that vessel sizes constitute separate markets.
The trade press and the Baltic Exchange publish price indexes for each standard vessel
size. Consultants' reports divide the market on the basis of vessels' sizes.
[34] TACA Decision, cited above in footnote 15, paragraph 85; the Revised TACA Decision,
cited above in footnote 15, paragraphs 85 and 86 and the TACA Judgment, cited above in
footnote 21, paragraphs 924, 925 and 927.
[35] Depending on the specificities of the relevant tramp shipping market shorter periods
may be envisaged.
[36] Vessel capacity provides information on the parties' ability to compete for voyages.
Volume and value share data may illustrate the parties' general position in the market. Data
in relation to contract negotiations may indicate the parties' possibilities to exert market
power in contract negotiations.
[37] Commission Decision No 2000/627/EC of (Case IV/34.018 — Far East Trade Tariff
Charges and Surcharges Agreement (FETTSCA)), OJ L 268, 20.10.2000, p. 1, paragraph
153. Judgment of the Court of First Instance in Case T-229/94, Deutsche Bahn AG v
Commission of the European Communities [1997] ECR II-1689, paragraph 37.
[38] OJ L 100, 20.4.2000, p. 24. Regulation (EC) No 823/2000 applies to international liner
transport services from or to one or more Community ports exclusively for the carriage of
cargo chiefly by container — see Articles 1, 2 and Article 3(2)(g) thereof.




                                                                                                 32
[39] Judgment of the Court of Justice in Case C-7/95 P, John Deere v Commission [1998]
ECR I-3111, paragraph 90 and Judgment of the Court of Justice in Case C-194/99 P,
Thyssen Stahl v Commission [2003] ECR I-10821, paragraph 81.
[40] Judgment in John Deere v Commission, Case C-7/95 P, cited above in footnote 39,
paragraph 88.
[41] Judgment in Joined Cases 40 to 48, 50, 54 to 56, 111, 113 and 114/73 Suiker Unie v
Commission [1975] ECR 1663, paragraphs 173-174.
[42] Judgment of the Court of Justice of 23 November 2006, in Case C-238/05, Asnef-
Equifax v Asociación de Usuarios de Servicios Bancarios (Ausbanc), OJ C 331, 30.12.2006,
p. 10, paragraph 52 and Judgment of the Court of Justice in Case C-49/92 P, Commission v
Anic Partecipazioni [1999] ECR I-4125, paragraphs 116 and 117.
[43] Judgment of the Court of First Instance in Case T-35/92 John Deere Ltd v Commission
[1994] ECR II-957, paragraph 51, upheld on appeal by the Judgment in John Deere Ltd v
Commission, Case C-7/95 P, cited above in footnote 39, paragraph 89. More recently, the
Judgment in Asnef-Equifax v Ausbanc, cited above in footnote 42.
[44] Judgment of the Court of First Instance in Case T-141/94 Thyssen Stahl AG v
Commission [1999] ECR II-347, paragraphs 402 and 403.
[45] Judgment of the Court of Justice in Cases C-89/85, C-104/85, C-114/85, C-116/85, C-
117/85 and C-125/85 to C-129/85 A. Ahlström Osakeyhtiö and others v Commission [1993]
ECR I-01307, paragraphs 59-65.
[46] Judgment in John Deere Ltd v Commission, Case C-7/95 P, cited above in footnote 39,
paragraphs 75-77.
[47] Guidelines on the application of Article 81(3), cited above in footnote 7, paragraph 16.
[48] Guidelines on the application of Article 81(3), cited above in footnote 7.
[49] Guidelines on the application of Article 81(3), cited above in footnote 7, paragraph 25.
[50] There are several ways to assess the degree of concentration of a market. One of these
is the Herfindahl-Hirschmann Index (HHI).
[51] While transparency between traders is likely to intensify competition in a truly
competitive market, the exchange of detailed market information on a highly concentrated
oligopostic market may enable traders to know the market positions and strategies of their
competitors and thus impair appreciably the competition that exists between them. See the
Judgment in John Deere Ltd v Commission, Case C-7/95 P, cited above in footnote 39,
paragraph 88.
[52] In liner shipping there are operational and/or structural links between competitors, for
example membership of consortia agreements that allow shipping lines to share information
for the purposes of providing a joint service. The existence of any such link, will have to be
taken into account on a case by case basis when assessing the impact an additional
exchange of information has in the market in question.
[52] See Council Regulation 1419/2006, OJ 2006 L269/1 at paragraph 7 of the recitals:
"…carriers participate in conferences and consortia on the same trade, exchanging
commercially sensitive information…Given the increasing number of links between
carriers in the same trade…"
[53] TACA Judgment, cited above in footnote 21, paragraph 1154. The case law can be
summarised as establishing that it is only if the exchange is limited to the collection of
otherwise public data and that no evidence points to contact between competitors for
the purpose of discussion and/or elaboration of strategies based on that data that it can
be concluded that no infringement of Article 81 should be found. The statements by the
CFI in the TACA case that the exchange of public information relating to service contracts in
that case could not infringe the Treaty competition rules because they were in the public
domain has to be read in the light of the facts of that case and the liner conference system
which will be coming to an end on 18 October 2008.



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[54] Commission Decision No 78/252/EEC of 23 December 1977 relating to a proceeding
under Article 85 of the Treaty (Case IV/29.176 — Vegetable Parchment) (OJ L 70,
13.3.1978, p. 54).
[55] Commission Decision No 92/157/EEC in Case IV/31.370 — UK Agricultural Tractor
Registration Exchange, OJ L 68, 13.3.1992, p. 19, paragraph 50.
[56] Commission Decision 98/4/ECSC in Case IV/36.069 — Wirtschaftsvereinigung Stahl,
OJ L 1, 3.1.1998, p. 10, paragraph 17.
[57] Guidelines on the application of Article 81(3) of the Treaty, cited above in footnote 7.
[58] Vessels participating in the pool are often of a more or less similar type. This results in
the pool being able to attract large CoAs, combine various CoAs and reduce the number of
ballast legs by careful fleet planning.
[59] For example, the pool's vessels are marketed as one commercial unit offering transport
solutions regardless of which ship performs the actual voyage.
[60] For example, the pool's income is collected by the central administration and revenue is
distributed to the participants based on a complex weighting system.
[61] Respectively in section 5 and section 3 of the Guidelines, cited above in footnote 5.
[62] Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of
concentrations between undertakings (the EC merger Regulation) (OJ L 24, 29.1.2004, p.
1).
[63] To be published.
[64] Article 2(4) of Regulation (EC) No 139/2004.
[65] Commission Notice on agreements of minor importance which do not appreciably
restrict competition under Article 81(1) of the Treaty, OJ C 368, 22.12.2001, p. 13 and
Guidelines on the effect on trade concept, cited above in footnote 13.
[66] See above footnote 13.
[67] Price-fixing activities of independent ship-brokers when fixing a vessel do not fall under
this category.
[68] Guidelines on Horizontal Cooperation Agreements, cited above in footnote 6,
paragraphs 144 and 148.
[69] Guidelines on the application of Article 81(3), cited above in footnote 7, paragraph 16.
[70] Horizontal Guidelines, cited above in footnote 6, paragraph 142.
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