Shipping companies: Europe investigates price fixing

Shipping companies were visited Monday by European Commission officials looking for evidence of price fixing. US exporters, importers with similar complaints against the shipping companies are watching closely.

Yuriko Nakao/Reuters/File
Global shipping line APL's container is loaded on a cargo ship at Yokohama port in Yokohama, south of Tokyo April 26, 2011. APL is one of at least eight container-shipping companies whose European offices had announced visits May 17, 2011, by European Commission officials looking for evidence of price fixing.

The world's biggest shipping companies are getting some close scrutiny for suspected price fixing.

Export and import companies in the United States, Europe, and Asia complained bitterly last year of rapidly rising rates that seemed to occur nearly simultaneously among the world's leading container-shipping companies.

On May 17, officials of the European Commission conducted unannounced inspections of the European offices of at least eight of those companies, looking for evidence of anticompetitive behavior. They include the world's largest and third-largest container-shipping companies (A.P. Moller-Maersk Group and CMA CGM, respectively). In all, six of the world's Top 10 carriers are involved in the probe.

"The Commission has reason to believe that the companies concerned may have violated the antitrust rules that prohibit cartels and restrictive business practices and/or abuse of a dominant market position," the commission said in a statement, confirming the inspections. But it cautioned that the inspections are a preliminary step.

"The fact that the Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself," it said in its statement.

Besides Maersk (based in Denmark) and CMA CGM (based in France), inspectors reportedly also paid visits to the European headquarters of Hapag-Lloyd and Hamburg Süd (Germany), Neptune Orient Lines (Singapore), Orient Overseas (Hong Kong), Evergreen Marine (Taiwan), and Hanjin Shipping (South Korea).

Several companies acknowledged the visits and said they were cooperating fully with investigators.

If price fixing is going on, Europe has the strongest case to make. In 2008, the European Commission outlawed collusion over prices. In most other regions, shipping companies have some form of immunity from antitrust laws.

In the US, for example, the shipping industry has had some form of immunity ever since the 1916 Shipping Act. In its current form, the companies cannot collude to issue rates, but they can meet and issue price guidelines.

During the Great Recession, shipping prices plummeted and US companies locked in contracts at good rates. But as the world economy picked up, the carriers began imposing new charges, despite the long-term contracts.

Exporters and importers "were concerned that all the carriers were doing pretty much the same thing." says Peter Gatti, executive vice president of the National Industrial Transportation League in Arlingon, Va., an industry group representing exporters and importers.

Was it price fixing? The companies complained to the Federal Maritime Commission, which conducted a months-long fact-finding investigation. But this past December, it issued no findings and initiated instead a series of measures to foster more cooperation between carriers and their customers.

In the wake of similar complaints in Europe, the European Commission's inspections this week provide a sharp contrast to the US response, Mr. Gatti says. "We're watching it, as everyone else is. [But] we'll need to wait and see what conclusions they reach."

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