On 15 January 2010, the European Commission (the “Commission”) announced that it has opened a formal investigation into an alleged breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU) (formerly Article 81 of the EC Treaty) by companies involved in the “Baltic Max Feeder” scheme.
Under the scheme, European feeder vessel owners enter into collective agreements to cover the costs of removing feeder vessels from service. Feeder vessels are smaller container ships which operate on short-sea transport routes within Europe. Feeder vessels typically transport, or “feed,” containers arriving at or departing from large central container terminal ports in Europe served by deepsea container vessels, to smaller ports in the region. Operators of feeder vessels either own their vessels or charter them from the vessel owners. The Baltic Max Feeder scheme has been developed and promoted by independent tax advisors most likely as a response to current overcapacity of feeder container vessels in Europe. Overcapacity has led to a decrease in charter rates. The Commission is concerned that the scheme may be aimed at reducing capacity in the market and, therefore, with the sole objective of increasing the costs of chartering feeder vessels.
The investigation into the Baltic Max Feeder scheme is the first formal investigation procedure launched by the Commission in the maritime transport sector since changes made to European maritime transport regulation which came into effect in October 2008. In 2006, the European Council repealed the exemption from general EU competition rules afforded to liner shipping conferences. As a result, since October 2008 ship owners/operators have been left to their own devices in assessing whether their business practices comply with the competition rules. Specific maritime guidelines, adopted by the Commission, and published in the wake up the regulation change in July 2008, went some distance in providing market participants with the means to understanding the implications of the changes. The guidelines provided details on market definition, information exchange, operational co-operation agreements and so-called pool agreements. Whilst providing some practical use, the guidelines have yet to be tested and interpreted by the Commission, and/or the Courts, in relation to a specific set of facts. It is likely, then, that the outcome of the Baltic Max Feeder investigation will prove telling for all participants in the maritime transport sector, as it begins to cope with life post-exemption. Given this is the first competition investigation under the new regulatory framework, the operators involved can be sure of one thing: a lengthy and time-consuming process amounting to a thorough review of the relevant market, and the applicability of the EU competition rules to it.