The Competition Commission Recommends Block Exemptions for Liner Agreements in the Maritime Industry

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1. The Competition Commission of Singapore (CCS) will be recommending to the Minister for Trade and Industry to exempt categories of scheduled international cargo liner agreements (or “liner agreements” in short) from section 34 of the Competition Act 2004 ('Act'). The block exemption orders are targeted to be finalised by July 2006, and will take retrospective effect from 1 January 2006. 

Liner Agreements

2. The block exemptions will cover consortium, conference and discussion agreements. These agreements have historically been granted a degree of immunity by competition authorities in many jurisdictions, including the European Union, the United States, Australia and Japan. While the European Commission (EC) and Australia are undertaking a review of their exemptions for liner agreements, the current immunity for these agreements remains in place pending the final outcome of their reviews. 

3. The CCS recognises that Singapore, being part of the global shipping network, has to be mindful of the regulatory environment in which different stakeholders in the shipping industry operate. After considering the nature of the shipping trade, international developments, Singapore’s market context as well as inputs from the shipping lines and shippers, the CCS is of the view that block exemptions will create a similar regulatory environment for shipping lines as in many parts of the world, and give certainty to the local shipping industry. The CCS thus recommends the following: 

(a) A block exemption of up to 2010 for consortium agreements. This is because such agreements are generally considered to have net economic benefits; and 

(b) A block exemption for an initial unspecified period for conference and discussion agreements. However, this will be subject to review by CCS in the light of developments in the local and international maritime industry. 

4. The block exemption orders will contain conditions or obligations for the shipping lines to comply in order for their agreements to enjoy the immunity. Following this announcement, the CCS will commission a consultancy study to formulate the specific scope and conditions of the block exemption orders that are relevant to Singapore’s context, with inputs from relevant parties. The consultant will take into account the role of Singapore’s port as a transshipment hub, which may require differences in drafting from the text used in other jurisdictions’ block exemptions. 

5. The proposed block exemptions are targeted to be released for public consultation in the later part of March 2006. After assessing the comments received, the CCS will then make a recommendation to the Minister of Trade and Industry to issue the block exemption orders by July 2006.

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About the Competition Commission of Singapore

The CCS is a statutory body established under the Competition Act 2004 ('Act') on 1 January 2005 to administer and enforce the Act. Its mission is to promote healthy competitive markets that will benefit the Singapore economy based on sound economic principles applied objectively and consistently. For more information, visit www.ccs.gov.sg.