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Pull back from antitrust restrictions

Pull back from antitrust restrictions
Chairman of Orient Overseas (International) Ltd Tung Chee-chen has issued an impassioned call for governments to pull back from antitrust restrictions.

Chairman of Orient Overseas (International) Ltd Tung Chee-chen has issued an impassioned call for governments to pull back from antitrust restrictions.

Chairman of Orient Overseas (International) Ltd Tung Chee-chen has issued an impassioned call for governments to pull back from antitrust restrictions that curtail shipowners discussing solutions that alleviate the shipping crisis, such as ?overcapacity and rationalisation of services?.

Mr. Tung urges governments everywhere to avoid the temptation of direct subsidies, already in evidence in bailouts of some shipping lines, shipyards in South Korea and other rescues being mulled by the European Union.

Declaring these measures as unnecessary distortions to shipping markets, he recommends that shipowners be allowed for a period of ?perhaps one year? to find a collective solution to problems such as the glut in the order book without the onus of anti-trust action being taken against them. He also suggests that the Chinese government could take the lead, with its major trading partners following suit.

OOIL controls the world"s 13th largest container line, Orient Overseas Container Line, and reported an interim loss of $231m ? its first in 10 years ? in July. OOIL is based in Hong Kong and is a legacy business of the Tung family, which began the enterprise in Shanghai more than 60 years ago.

Mr Tung"s entry into the fray ? see his essay on page 8 ? represents an unusual burst of strong opinion in the normally reticent Asian shipping community.

?I am not advocating a return to the past, nor am I endorsing price-fixing conferences,? he told. But he says that government restrictions have hobbled the industry"s ability to solve such dire issues as the glut in the shipbuilding orderbook.

In his essay, Mr Tung writes that ?legislations in different jurisdictions in recent years have begun to restrict liner companies" ability collectively to discuss industry issues?.

He is referring primarily to the European Union"s removal of antitrust exemption for the liner industry in Europe, which abolished conferences but also effectively limited industry discussions above and beyond agreements on pricing. His statements echo, in part, those made by CMA CGM chairman Jacques Saadé, who several weeks ago blasted the EU for overzealous restrictions on shipping, meant to ensure open competition.

?Our belief is that the existing platforms for discussion of industry issues should be extended further,? Mr Tung writes. ?While the industry is suffering to such a drastic extent, our goal should be to work with governments to provide our industry with the ability to collectively discuss capacity management and rationalisation, for a period of, say, one year.?

The backdrop for his stance is an increasingly acrimonious parlay of voices between Asian shipping figures and their counterparts in Europe.

The latest voice to enter the debate was Cyril Ritter, an antitrust case handler for the European Commission"s Directorate General for Competition.

?We are anxious to show our trading partners that there are sound economics behind the decision [to end conferences],? the official said. He urged China, along with the US, to foster a more competitive maritime culture on all trades.

Mr Tung believes that it may be too early for the Chinese shipping industry to withstand open competition, and supports some government involvement broadly across many problems the industry faces. He emphasises, however, that the involvement should be temporary.

He adds that, ultimately, shipping will have to learn from the logistics industry, which has been able to pass on costs to its customer base without detriment to its global business.


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