Liner Shipping is the industry involved in the the business of offering ocean shipping services

in international trade. This industry has had a very atypical history in terms of the application

of competition law. Since the industry’s inception in the 19th century late, co-operative

arrangements between the liner shipping companies, have enjoyed exemptions from the effect

of certain competition rules and laws.

However, in the past few decades, several jurisdictions have undergone regulatory reforms.

In these circumstances, carriers continue to collaborate while the competition authorities

ensure that there remains sufficient competition in the market.

Some of the co-operative arrangements are: The main co-operative arrangements among

other are:

First, Liner Conferences- arrangements between shipping lines which enable them to utilize

common freight rates and to engage in other cooperative activities on particular routes

Consortium- agreements/arrangements between liner shipping companies aimed primarily at

supplying jointly organized services

Second, VSA- i.e. Vessel sharing agreements- agreements between various

container shipping lines who agree to operate a liner service along a specified route using a

specified number of vessels

Global Alliance- small group of carriers which have as their purpose to establish, on a global

basis, cooperative agreements involving substantial asset sharing and operational

cooperation, while maintaining individual marketing and commercial identities.

Capacity stabilization and discussion/talking agreements are more flexible forms of

cooperation, mainly used when there is a large number of non-conference operators

participating in a certain trade, or where conferences are open, and therefore efforts by

conferences to regulate capacity are ineffective

The international community’s efforts so far have not resulted in a standard legislative

approach to these cooperative agreements. However, few instruments developed by

international organizations are worth noting.

Two instruments are worth noting

The United Nations Convention on a Code of Conduct for Liner Conferences was adopted by

United Nations Conference on Trade and Development in 1974 which sets out an

international regulatory framework providing rules on access to cargo shares by ship owners.

It imposes certain obligations upon them, aimed at protecting the shippers’ interests and those

of the national shipping lines of third countries

In 1961, Organisation for Economic Cooperation and Development adopted the

Code of Liberalization of Current Invisible Operations which refrained members from taking

action that would be contrary to the principle of free circulation of shipping in international

trade and free and fair competition

Moving on to the comp laws for liner shipping in imp legal systems like that of US an

EU are

, REGULATORY FRAMEWORK FOR COMPETITION

The USA: the Ocean Shipping Reform Act of US, provides limited antitrust

immunity for liner conf from competition law. US It allows conference members

to negotiate independent confidential service contracts with shippers and

prohibits other members from retaliating against the same. shippers or carriers

that do so. All Other than that, conduct that does not fulfil antitrust exemption

requirements is subject to competition law and investigated by the Department

of Justice if it involves cartel-like practices, including price fixing, bid rigging and

market allocation.

The EU- They have a regulation which also provides for block exemption for liner

conferences from European Union competition rules. There are 4 cond which

needs to be fulfilled for exemption: However, there are certain cond which needs

to be fulfilled for exemption like

- agreement contributes to improving the production or distribution of goods or

promote technical or economic progress

- consumers must be compensated for the negative effects resulting from the

restriction of competition

- conduct must not impose on the undertakings concerned restrictions which are

not indispensable to the attainment of its objectives-

- conference should remain subject to competitive constraints

Lastly, when we talk abt comp law in india regarding liner shippinh,

The recent dev was granting of exemption to VSA from scrutiny under Section 3 of

the Competition Act, 2002 by MCA till Jul 2021 which will again be reviewed then. The
Exemption applies provided that agreements exclude collusive practices involving fixing of

prices, limitation of capacity or sales and the allocation of markets or customers.

That was all at liner shipping

INDia- On 4 July 2018, the Ministry of Corporate Affairs (MCA) extended the vessel sharing

exemption applicable to the liner shipping industry from scrutiny under Section 3 of the

Competition Act, 2002 (Exemption) for a further period of three years. All vessel sharing

agreements (VSAs) are subject to monitoring by the Directorate General of Shipping,

Ministry of Shipping, Government of India (DG Shipping). The Exemption continues to apply

to carriers of all nationalities, operating ships of any nationality from any Indian port provided

such agreements exclude collusive practices involving fixing of prices, limitation of capacity

or sales and the allocation of markets or customers.