Singapore’s Ministry of Trade and Industry (MTI) announced the extension for another five years of the exemption of vessel sharing agreements from the anti-competition law when the exemption expires on December 31 this year.
MTI said the extension of the block exemption order—or Competition (Block Exemption for Liner Shipping Agreements) Order (BEO)—is to be enforced for another five years until December 31, 2020.
Through the BEO, MTI said liners may engage in liner shipping agreements (LSAs) that include those on non-mandatory adherence to tariffs and on allowing member liner operators to enter individual confidential contracts and offer their own service arrangements if they can fulfill certain conditions and obligations.
“To qualify for exemption, agreements should have net economic benefits, in that they improve production or distribution, or promote technical or economic progress, and have only restrictions that are necessary to achieve these benefits and do not substantially eliminate competition,” said MTI.
An LSA refers to an agreement between two or more vessel-operating carriers to cooperate in terms of making technical, operational or commercial arrangements; price; or remuneration when providing liner shipping services, such as the inland carriage of goods as part of through transport.
In extending the exemption, MTI explained: “The Competition Commission of Singapore (CCS) notes that transhipment makes up a very large proportion of Singapore container volumes, and has assessed that the high degree of connectivity and availability of liner shipping services in Singapore benefits Singapore’s importers and exporters beyond what might ordinarily be expected if the port depended only on exports and imports.”
It added: “It is internationally recognised that LSAs, which facilitate the sharing of vessels among liners, enable more frequent services and cost savings for liners. They may also enable a group of smaller liners to provide services that compete with larger liners. Antitrust exemptions for LSAs generally remain the regulatory norm worldwide.”
Under Section 34 of the Competition Act, liners are barred from forging agreements, decisions, and concerted practices that can prevent, restrict, or distort competition in Singapore. However, the Minister for Trade and Industry may order certain liner shipping services exempted from the prohibition.
Photo: Mohd Kamal from Singapore
