Minister for Trade and Industry issues Block Exemption Order (BEO) for Liner Shipping Agreements in the Maritime Industry

Minister for Trade and Industry issues Block Exemption Order (BEO) for Liner Shipping Agreements in the Maritime Industry

The Minister for Trade and Industry has today issued a block exemption order (BEO) to exempt liner shipping agreements2 relating to liner shipping services3 from section 34 of the Competition Act (Cap. 50B) ('Act')1. This is provided that they fulfill certain conditions and obligations, such as allowing member liner operators to offer their own service arrangements on a confidential basis.

The BEO was based on the recommendation from the Competition Commission of Singapore (CCS) that the BEO would broadly align Singapore’s regulatory environment with that of major jurisdictions. It would also help to maintain Singapore’s position as a premier international maritime center and ensure that businesses in Singapore will continue to have access to reliable and competitively priced liner shipping services of adequate frequency. CCS’ recommendation to the Minister was finalized after taking into account the industry’s inputs received during the public consultation exercise in April this year. The BEO will take effect retrospectively from 1 January 2006 (when section 34 of the Act came into effect) and will last for five years. The CCS may, where circumstances so warrant, review the BEO before the expiry of 5 years.

Where the members of a liner shipping agreement collectively hold more than 50% market share in any market operated under the agreement, they are required to fulfill additional obligations relating to the filing and publication of information for the agreement to be exempted. An exemption may be cancelled in a particular case where, for example, a liner shipping agreement produces effects that do not satisfy the net economic benefit criteria as set out in section 414. 

More information on the BEO issued can be found on the CCS website at

www.ccs.gov.sg

.
Ministry of Trade and Industry
14 July 2006

-------------------------------------------------------------- 

Annex A

1.The prohibition in section 34 of the Competition Act relating to anti-competitive agreements came into effect on 1 January 2006.Thefocus is on activities, that have an appreciable adverse effect on competition in Singapore and which do not have a net economic benefit.

2.‘Liner shipping agreement’ means an agreement between two or more vessel-operating carriers which provide liner shipping services pursuant to which the parties agree to co-operate in the provision of liner shipping services in respect of one or more of the following:

(i)technical, operational or commercial arrangements; or
(ii)price;
(iii)remuneration term.

3.‘Liner shipping services’ means the transport of goods on a regular basis on any particular route between ports and in accordance with timetables and sailing dates advertised in advance and made available, even on an occasional basis, by a liner operator to any transport user against payment. Liner shipping services include inland carriage of goods occurring as part of through transport but do not include bulk and tramp shipping.

4. Section 41 sets out the criteria for block exemptions. A block exemption may be made to exempt agreements which contribute to

a. improving production or distribution; or
b. promoting technical or economic progress,

but which does not

i. impose on the undertakings concerned restrictions which are not indispensable to the attainment of those objectives; or
ii. afford the undertakings concerned the possibility of eliminating competition in respect of a substantial part of the goods or services in question.

Please click here [PDF, 47 KB] for the CCS Explanatory Note on the Competition (Block Exemption for Liner Shipping Agreements) Order 2006.