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Liner Shipping to be Subject to Competition Rules

December 2008 - Transport. Legal Developments by Wikborg Rein.

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Since 1987 EU Block Exemption Regulation 4056/86 has allowed liner conferences to fix prices and regulate capacity under certain conditions. This will cease on October 18 2008, following which the slightest violation of the competition rules may trigger dawn raids, investigations and penalties, including significant fines and criminal liability.

EU Abolishes Block Exemption
On September 25 2006 the European Union adopted Regulation 1419/2006 repealing the block exemption, meaning that price fixing and capacity regulation in liner conferences will not be permitted on trade to and from EU ports. To allow shipping lines to adapt to the repeal, it was made subject to a two-year transitional period which ends on October 18 2008. However, in order to avoid unnecessary antitrust risks, carriers should begin preparations now.

Norway Follows Suit
The regulation was incorporated into Norwegian law on February 16 2007 by an amendment to Regulation 964/1992. Therefore, from October 18 2008 the liner shipping block exemption will be repealed under Norwegian law and Norwegian competition law will apply fully to liner shipping.

Recommendation
In light of these changes, companies operating in the liner shipping sector should ensure that before the end of the transition period they no longer take part in liner shipping conferences and that their existing cooperation agreements and service agreements comply fully with applicable rules. In particular, liner shipping companies should:

review current operations, especially any cooperative arrangements;
implement an updated and comprehensive competition compliance programme ensuring that the management and all employees are aware of where the boundaries of permissible behaviour lie. The competition compliance policy must be implemented actively and not be only a paper policy; and
implement and review contingency procedures to be followed in case of a dawn raid by EU or national competition authorities, including a policy of disclosure of documents, releasing information and immediate support from legal advisers.
For further information please contact Gaute Gjelsten at Wikborg Rein by telephone (+47 22 82 75 00) or by fax (+47 22 82 75 01) or by email (ggj@wr.no).

The materials contained on this website are for general information purposes only and are subject to the disclaimer.

Authors
Kristoffer Larsen Rognvik
Aksel J Hageler
√ėystein Meland

For more information please visit www.wr.no