European Commission removes safe harbour for shipping liners

On 10 October 2023, the European Commission announced that it had decided not to extend the Consortia Block Exemption Regulation (CBER) when it expires on 25 April 2024.

The CBER exempts shipping liners from Article 101(1) TFEU when entering into cooperation agreements to provide joint cargo transport services (subject to certain conditions). The original rationale for the CBER when it was introduced in 1995 was that the use of “consortia” tends to drive economies of scale by using space better on ships, and that a fair share of the benefits can be passed on to users of shipping services.

Following a recent review process in which the Commission gathered evidence on the functioning of the CBER and the challenges currently facing the shipping industry, it has concluded that the CBER had “at best limited effectiveness and efficiency” and “does not appear to be fit for its purpose any more”. In reaching this conclusion, the Commission found that the small number and profile of consortia falling within the scope of the CBER has resulted in only limited cost compliance savings for businesses (when compared to self-assessment). Furthermore, the Commission found that the evidence it received as part of its review was “inconclusive” in terms of whether the efficiencies resulting from the consortia arrangements were still providing sufficient consumer benefits, nor did it consider that consortia were “indispensable” (within the meaning of Article 101(3) TFEU) to achieve environmental efficiencies. The Commission also suggested that the CBER had contributed to structural issues in the market where the cost of entry has become prohibitive and where service differentiation has disappeared. This marks the continuation of a broader trend of the Commission deciding not to renew sector-specific block exemptions in favour of a greater focus on self-assessment under Article 101(3).