OOCL escapes penalty of $185m

PUBLISHED : Wednesday, 01 October, 2003, 12:00am
UPDATED : Wednesday, 01 October, 2003, 12:00am

Court decision saves OOCL $185m fine

Orient Overseas Container Line (OOCL) received a HK$185 million reprieve yesterday when Europe's second-highest court overturned a record fine imposed five years ago by the European Commission.

The 15-member Transatlantic Conference Agreement (Taca), of which OOCL is a member, was collectively fined 273 million euros (HK$2.46 billion) by the EC in 1998 for allegedly fixing maritime and inland transport prices.

But the European Court of First Instance found yesterday the commission had infringed the carrier's rights 'by using documents in support of its complaints concerning the specific [anti-competitive] measures without giving the Taca parties the opportunity to comment'.

However, the court upheld the commission's finding that Taca's behaviour 'infringes [Europe's] competition rules' and also backed the commission's refusal to grant the carriers antitrust immunity.

The decision, which saved OOCL 20.63 million euros, brought to an end the latest in a series of court cases and investigations scrutinising anti-competitive pricing by carrier groupings.

Members of the Transpacific Stabilisation Agreement (TSA), which mostly move cargo between Asia and the United States, last month agreed to pay US$1.35 million to the US Federal Maritime Commission rather than face civil charges for collectively discriminating against freight forwarders. The TSA did not admit culpability.

Taca members had asked for an exemption from antitrust rules, arguing their capital intensive industry needed price and vessel capacity co-ordination in order to survive.

They said the consumer ultimately benefited from equipment programmes, which provided better quality services and efficiency. The commission rejected that argument in 1998 and the court concurred yesterday.

'The annulment is based partly on a lack of evidence and infringement of the rights of the defence and partly on the immunity conferred by notification to the commission,' the court said in its judgment released yesterday.

Taca members fined in 1998 included Singapore's Neptune Orient Lines, Japan's No1 carrier Nippon Yusen Kaisha (NYK) and South Korean carriers Hanjin Shipping and Hyundai Merchant Marine.

Hanjin and NYK were fined the same amount as OOCL, while Hyundai was penalised 18.56 million euros and NOL 13.75 million euros.