Tuesday, 23 May 2006 05:30
The Singapore National Shippers Council (SNSC) and the Asian Shippers’ Council (ASC) have submitted a joint response to the Competition Commission of Singapore (CCS) on the proposed Block Exemption Order for Liner Shipping Agreements, known as BEO in short.
In our submission during CCS’ public consultation, we expressed our strong reservations about the BEO in general, and the terms of the BEO in particular, which run contrary to the interests of shippers, and of Singapore, a renowned proponent of free trade.
Our submission noted, “CCS’ decision to grant the BEO to liner shipping agreements is not in keeping with this free trade spirit which Singapore advocates. This will send a wrong message to Asia and the world, which perceive Singapore as a stout defender of the free market.
“The anti-trust immunity shipping lines have enjoyed for well over 100 years is already obsolete in view of impending changes at the European Commission, which is putting the mechanism in place to outlaw block exemptions on trades from Europe. To accord liner shipping agreements a BEO of five years, effective from 1 January 2006, when the momentum in Europe suggests that changes to the law governing exemption could come sooner, is in our view unnecessarily generous. CCS should reconsider this, as it had noted in its cover letter, “Singapore is part of a global shipping network” and Singapore’s regulatory environment should be aligned with that already in place for major jurisdictions.”
We also voiced our exception to preconditions specified by the CCS, which applied only to liner groupings with more than 50% market share. As we pointed out in our submission, “Shippers already view with concern Maersk’s acquisition of P & O Nedlloyd, which raises its market share to nearly 20%. If preconditions have to be established, it is the councils’ view that the quantum should be lower to allow the free play of market forces and avert any possibility of a monopoly.”
As the BEO distorts the free market, it goes against the grain of Singapore’s free trade policy. And any distortion is self-defeating, as underscored by the boom-bust cycles in the shipping industry. If the BEO is deemed necessary to align Singapore with international norms, we urge the CCS to review the terms of the BEO as they are unnecessarily generous to liner shipping agreements.
