CCI cries foul over shipping firms’ lobby for anti-trust immunity

The ship liners association has approached the corporate affairs ministry seeking exemption from competition law,a move that is being severely opposed by the Competition Commission of India. Ship liner associations are groups of ship liners who come together to operate cargo services on designated routes,agree on prices and share space on each other’s vessels. The prices these ship liners’ conferences agree upon tend to become the benchmark for other ship liners. Under Section 54 and 55,the government has powers to exempt from the Competition Act.

Such agreements,according to the CCI,are anti-competitive under Section 3 of the Competition Act,as they involve fixing prices and freights for the industry. After the notification of the Section early this year,the ship liners have been lobbying hard for anti-trust immunity,which is block exemption from anti-competitive regulations. So far,members of the liner conferences have enjoyed such immunity given the fact that India is signatory to the UN Code of Conduct for Liner Conferences,which permits liner agreements including rate fixing.

Making a case for exemption,city-based Corporate Law Group,on behalf of Oakland-based ship liner associations,has said if such agreements are not exempted from the competition law,it would lead to their paying a penalty of up to 10 per cent of their turnover worldwide. This,according to the ship liners,would cause irreparable damage to the industry.

Story continues below this ad

In India,more than 90 per cent of goods in terms of volume and more than 70 per cent by value are transported by ships. The CCI,which has made a presentation to the ministry on the issue,is clearly not in favour of such immunity to the industry. According to sources,granting exemption to the industry will have wider ramifications for the economy,more so for imports and exports,cost of imports and international competitiveness.

The airline industry,which is similar to the ship liners,sources said,shows that encouraging market forces and eliminating exemptions lead to robust competition,lower prices and increased efficiency.