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US not to annul antitrust immunity

US not to annul antitrust immunity
The US is in no rush to copy Europe and abolish container lines? antitrust immunity, despite calls from some shippers for a global ban on conferences.

US reluctant to abolish antitrust immunity

Federal Maritime Commission is still not convinced an outright ban would result in lower transport costs.

The US is in no rush to copy Europe and abolish container lines" antitrust immunity, despite calls from some shippers for a global ban on conferences.

A reluctance to follow Brussels, which outlawed conferences in the European trades in October 2008, was spelled out yesterday by Federal Maritime Commissioner Michael Khouri.

The Federal Maritime Commission is still evaluating the impact of the European repeal on US trades, but remains unconvinced at this stage of the merits of the regulatory overhaul.

?The removal of the carefully tailored and limited US antitrust immunity could well result in chilling the willingness and ability of carriers to explore and craft cost-saving efficiencies that benefit shippers and consumers,? Mr Khouri told an industry conference.

The position of the US will be a disappointment to many cargo interests that had hoped the change of law in Europe would persuade other jurisdictions to take similar steps to abolish collective pricing and liberalise the container trades. ?It is shippers who pay the carriers, and we have never been satisfied with conferences. Now they have finally gone [in Europe] and we can live with that,? said Adam Rashid of Sony Supply Chain Solutions.

When the conference system was finally outlawed in Europe 18 months ago, the European Commission said it would be lobbying for a change in the rest of the world. But FMC chairman Richard Lidinsky told Lloyd"s List last week that he has not received a call from the commission on this matter since he took office last summer.

Addressing Containerisation International"s Global Liner Shipping Conference, Mr Khouri said the FMC was conducting an economic study of the US-European trades over a five-year period starting two years prior to the EU ban, then covering the one-year transition and the two subsequent years.

However, he noted that many of the assumptions made in Europe about the effect of abolishing conferences had not materialised. Brussels had always thought the end of joint pricing would result in a gradual decline in ocean freight rates, whereas in fact Asia-Europe rates have more than doubled in recent months.

All observers accept that the true impact of removing lines" block exemption from EU competition law has been obscured by the global recession that has been responsible for some massive freight rate swings since late 2008. The change of the law in Europe coincided with the collapse of Lehman Brothers, which stalled world trade and sent freight rates crashing in the following months before they began to bounce back up.

Former Far Eastern Freight Conference director Rod Riseborough, who is now chief executive of Container Trade Statistics, said the industry should expect greater freight rate volatility now that conferences had disappeared from the European trades. He also questioned why shippers and regulators should expect lines to continue behaving as they had in the past when bound by conference rules and required to give notice of planned rate or surcharge adjustments.

?We are in an open market now; the business has changed,? he said in response to complaints that ocean carriers were no longer giving customers the same advance warning that they were required to do under the conference system.

The US revised the rules covering the international container trades serving the country 12 years ago when the Ocean Shipping Reform Act came into force. The legislation encouraged confidential one-to-one contracting but retained limited antitrust immunity for carriers.

That permits ocean carriers to belong to discussion agreements such as the Transpacific Stabilization Agreement, which can recommend rate changes but does not set prices.

Without the limited antitrust immunity allowed under OSRA, all discussion between competitors concerning vessel sharing would become problematic, Mr Khouri said. As the US knew from its experience of deregulating the domestic shipping trades, there would always be swings in both freight rates and capacity, regardless of whether some form of antitrust immunity existed, he noted.

As far as the US was concerned, ?the jury is still deliberating? on whether removal of lines" antitrust immunity really does produce benefits in terms of of lower transport costs, the commissioner said.


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