Competition

← Competition

The Consortia Block Exemption Regulation (“Consortia BER”)

Summary
Evaluation
Commission Proposal
Legal Act
Implementation

Overall state of play:

Evaluation finalised: SWD(2019) 411, 20.11.2019
Commission Regulation (EU) 2020/436; adopted; 24 March 2020

State of play, main conclusions, outlook

Council Regulation 246/2009 provides that, in accordance with the provisions of Article 101(3) of the Treaty, the Commission may, by way of Regulation, exempt consortia agreements from the application of Article 101(1) of the Treaty for a period limited to five years with the possibility of prolongation. Accordingly, the Commission has adopted a Consortia Block Exemption Regulation (Consortia BER), which sets the specific conditions for the Article 101(3) exemption of consortia agreements.

The evaluation of the Consortia BER showed with a sufficient degree of certainty that consortia meeting the conditions of Consortia BER still satisfy all four conditions of Article 101(3) TFEU. Under current and expected market conditions, consortia reduce costs through economies of scale, rationalisation of services, and better vessel utilisation.

The prolonged Consortia BER will expire on 25 April 2024.

Estimated savings and benefits

The purpose of the Consortia BER is to provide liner shipping companies (“carriers”) with legal certainty that would facilitate the formation of consortia that can be presumed to comply with Article 101(3) TFEU, thereby generating the efficiencies and benefits referred to in recitals 5 and 6 of the Consortia BER. According to the carriers the Consortia BER continues to simplify the analysis of consortia’s compliance with competition rules, limit the dependency on external advice and reduce legal costs.

The results show that the savings on legal costs were mostly unquantified by the carriers participating in the public consultation. Carriers explain that they are typically members of many consortia agreements that are frequently replaced or amended, and therefore require regular assessment of compliance with competition rules. One carrier estimated that the cost of external advice on a consortium’s compliance with EU competition rules may reach between EUR 80 000 to 240 000 depending on the complexity of the required analysis.

State of Play

Finalised: SWD(2019)411, 20.11.2019

Scope:

Commission Regulation (EC) No 906/2009 of 28 September 2009 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concentrated practices between liner shipping companies (consortia), OJ L 254, 29.9.2009, page 31.

Evaluation findings:

For consortia agreements meeting the conditions of Consortia BER, a fair share of those cost reductions can be expected to flow to customers as a result of competition among members of the same consortium (internal competition), complemented by the 30 % market share threshold, which ensures that sufficient competition remains from outside each consortium (external competition). Consortia agreements meeting the conditions of Consortia BER are indispensable to produce those efficiencies. There is no other less restrictive type of cooperation among container liner shipping operators that would produce the same benefits. Finally, consortia agreements meeting the conditions of Consortia BER do not afford their members the possibility of eliminating competition in respect of a substantial part of liner shipping services in the respective relevant markets, because of both external competition and internal competition.

Estimated savings and benefits

The Consortia BER provides liner shipping companies (“carriers”) guidance and higher degree of legal certainty with respect to the application of EU competition rules to consortia. Consequently, it facilitates the analysis carrier’s conduct in order to assess the compliance of their consortia with EU competition rules and help reducing legal costs.

The results show that the savings on legal costs were mostly unquantified; however, one carrier estimated that the cost external advice on compliance with EU competition rules can move between EUR 80 000 to 240 000.