OOCL among lines set for court fight over rule 'breaches'

PUBLISHED : Friday, 11 December, 1998, 12:00am
UPDATED : Friday, 11 December, 1998, 12:00am

Container shipping lines in the Trans-Atlantic Conference Agreement (Taca), including Orient Overseas Container Line (UK) (OOCL), have lodged an appeal against record fines imposed on them by the European Commission for breaches of competition rules.

In September, the commission fined the 15 Taca shipping lines a record aggregate 273 million ecu (about HK$2.48 billion) for breaching competition rules by operating a price-fixing cartel on the Atlantic trade.

OOCL was fined 20.63 million ecu, while Denmark's Maersk Line was fined 27.5 million, Sea-Land of the US 27.5 million, Anglo-Dutch P&O Nedlloyd 41.26 million, Japan's NYK 20.63 million, South Korea's Hanjin 20.63 million, Germany's Hapag Lloyd 20.63 million and South Korea's Hyundai 18.56 million.

The commission said Taca members, which had applied for exemption from Article 85(3) of the EC Treaty in 1994, had a joint market share of more than 60 per cent. In 1995, Taca carried more than 1.3 million teu (20 ft equivalent units) to northern Europe and the United States.

It found that Taca did not qualify for an exemption under EU rules on shipping conferences. It also found Taca members had abused their dominant position by restricting the availability of individual service contracts and by actively discouraging market entry by potential competitors.

The lines said they had lodged an appeal with the European Court of First Instance on the grounds that they had not held a dominant market position.

'The carriers, in lodging their appeal with the court, dispute that they are collectively dominant in the market and that they have committed any infringement of Article 86,' Taca said.

'The carriers have therefore requested that the court annul the decision on these grounds, and annul the fines.' Taca has pointed to the number of independent carriers joining the trade in the past two years and its poor profitability as evidence of the lack of a dominant position.

The group of shipping lines also said constructive discussions with the EU had led to them already amending their practices on the Atlantic.

They were now providing confidential individual contracts for shippers and had taken steps to terminate the conference's longstanding practice of agreeing to rates and conditions for inland transport in Europe, Taca said.

Taca emphasised its appeal did not affect its commitment to changes in working practices already agreed.

The P&O Nedlloyd fine reflected that the infringements took place before the merger of P&O and Nedlloyd. NOL and Hanjin are no longer members of Taca.

The commission may impose fines later on the price agreement related to inland services within the EU.