EU Shipping Law

Vincent Power

Document

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CHAPTER 11 European Union competition law: the old regime relating to shipping – Regulation 4056/86

A. Introduction

11.001 For more than two decades, Council Regulation 4056/86 of 22 December 1986 was the centrepiece of the EU’s competition regime relating to liner conferences.1 The regulation had two striking features. First, it laid down detailed rules for the application2 of what are now Articles 1013 and 1024 of the Treaty on the Functioning of the European Union (“TFEU”) to some forms of international maritime transport. Second, and more substantially, it contained a block exemption for liner conferences from the effects of,

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what is now, Article 101(1) of the TFEU5 and, in particular, it exempted price-fixing in certain circumstances despite price-fixing being usually the most serious breach of competition law. It is therefore important to see Regulation 4056/86 as not just the “liner conference block exemption” but also the procedural regulation which enabled the European Union’s (“EU”) competition rules to be applied to certain aspects of the shipping sector until the repeal of the regulation with effect from 18 October 2008.6 Some provisions of Regulation 4056/86 (such as those which provided that Article 101(1) did not apply to particular types of arrangement) could still be relevant today as a source of inspiration (though not legislation) even though the regulation itself has been repealed. By virtue of Regulation 4056/86, maritime transport was therefore insulated, in part, from the full effects of EU competition law. 11.002 The regulation was customised and dedicated to the international maritime transport sector. Regulation 4056/86 involved a unique exception to all the competition rules – a price-fixing7 cartel in the form of a liner conference was exempted under EU competition law. However, it was more than just price-fixing which was exempted, it was also capacity regulation and market sharing. Liner conferences were therefore privileged arrangements unlike almost any other in EU competition law.8 11.003 Article 1(3)(b) of Regulation 4056/86 defined a liner conference, for the purposes of the regulation, as being:

“a group of two or more vessel-operating carriers which provides international liner services for the carriage of cargo on a particular route or routes within specified geographical limits and which has an agreement or arrangement, whatever its nature, within the framework of which they operate under uniform or common freight rates and any other agreed conditions with respect to the provision of liner services”.9

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