Introduction
On 28 September 2009 the Commission adopted the Commission Regulation (EC) No 906/2009 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia) (“Consortia BER"). 1 Initially due to expire on 25 April 2015, the Consortia BER was prolongued for an additional 5 years with the Commission Regulation (EU) No 697/2014 (“Prolonging Regulation”) and will expire on 25 April 2020. 2
Objective and scope of the evaluation
The Consortia BER declares that in accordance with Article 101(3) TFEU the prohibition in Article 101(1) TFEU does not apply to certain types of consortia agreements and sets the specific conditions under which they are exempted.
The objective of the Consortia BER is to is to facilitate the creation and operation of consortia that meet certain conditions. The Consortia BER achieves this objective by providing consortia with clarity and legal certainty with respect to their compliance with EU competition rules. The Commission established that a BER for consortia agreements is justified because “consortia generally bring rationalisation and economies of scale which help to improve the productivity and quality of available liner shipping services” and “promote technical and economic progress”, 3 while “users of the shipping services […] may benefit from the improvements in productivity which consortia can bring about”. 4 When the Consortia BER was prolonged, the Commission established that “the justifications for a block exemption for consortia are still valid and that the conditions on the basis of which the scope and content of [the Consortia BER] were determined have not substantially changed”. 5
With the expiry date of Consortia BER approaching, the purpose of the evaluation is to assess whether the Consortia BER is still relevant and delivering on its objective. This will inform the decision of whether to let it expire or prolong it and, if so, under which conditions, if any. 6 The criteria that the Commission applied in the evaluation are Effectiveness, Efficiency, Relevance, Coherence, and EU added value.
The temporal scope of the evaluation is the period since the last prolongation of the Consortia BER in 2014 to this day. 7
Evaluation methodology
The Commission published the Roadmap of the Evaluation and ran a four-week consultation for public feedback on its Consultation. 8 The Commission also ran an online Public Consultation on the Consortia Block Exemption Regulation on its website for legislative initiatives. 9 Furthermore, targeted questionnaires were sent to several stakeholders as well as contacted all NCA’s to inform them about the ongoing evaluation and invite them to submit any observations. 10 In addition to the above, the Commission has conducted its own internal study of the liner shipping market and its developments (analysing e.g. relevant merger decisions, guidance documents, and sector-specific reports), organized several bilateral meetings with requesting stakeholders, and participated to a number of forums and conferences.
The evaluation consists of the interrelated assessments of whether the Consortia BER fulfils the criteria: Effectiveness, Efficiency, Relevance, Coherence and EU added value. For their assessment, the five criteria were elaborated into evaluation questions. The assessments draw from knowledge and collected data, which have been assessed based on their relevance, credibility and weight. The evaluation faced minor limitations, most notably as regards the collection of overall service price, the calculation of precise market shares, or to the difficulty in establishing and assessing causal links between factors.
Main findings
Effectiveness
The Consortia BER provides guidance on the conditions under which consortia agreements would be compatible with Article 101 TFEU. The Consortia BER is tailored to consortia agreements, referring to arrangement that are specific to consortia. It also employs industry-specific terminology that is easily understandable to industry participants. Consequently, compared to a baseline in which it would be absent, the Consortia BER facilitates the conclusion of consortia agreements by making the assessment of their compatibility with Article 101 TFEU easier and by providing higher legal certainty that decreases legal risk.
Efficiency
This criterion is used to assess what the effect of the Consortia BER is on costs, in particular, whether it helps undertakings to reduce costs or conversely whether it increases compliance costs. In the absence of the Consortia BER, the assessment of consortia compliance with competition rules would become more complex, thereby increasing the costs associated with self-assessment and possibly requiring the advice of external lawyers.
Overall, it is concluded that the Consortia BER is efficient as it helps carriers to reduce costs.
Relevance
Since the prolongation of Consortia BER in 2014, the liner shipping industry has been going through a process of consolidation, increased concentration and technological change, expressed in particular in the growing size of container vessels. Despite this evolution, the overall evidence available in this evaluation does not reveal material deterioration in the parameters of competition. In particular, over the evaluation period, prices have rather diminished alongside costs; levels of services seem to have remained broadly stable.
Consequently, there is no reason to depart from the longstanding view that consortia are an efficient way for providing and improving liner shipping services; moreover a fair share of the benefits resulting from the efficiencies are passed on to consumers 11 .