EC clears Maersk-Hamburg Süd deal

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Carl Collen

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EC clears Maersk-Hamburg Süd deal

Commission says acquisition will create a "healthy level of competition" that will benefit many EU companies

EC clears Maersk-Hamburg Süd deal

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The European Commission has cleared the proposed acquisition of German container liner shipping company Hamburg Süd by Maersk Line, subject to conditions.

According to the EC, the clearance is conditional upon the withdrawal of Hamburg Süd from five consortia on trade routes connecting Northern Europe and Central America/Caribbean, Northern Europe and West Coast South America, Northern Europe and Middle East, the Mediterranean and West Coast South America and the Mediterranean and East Coast South America.

On these routes, the merged entity would have faced insufficient competition after the transaction, the EC explained.

"Competitive shipping services are essential for European companies and for the EU's economy as a whole," noted commissioner Margrethe Vestager, in charge of competition policy. "The commitments offered by Maersk Line and Hamburg Süd will maintain a healthy level of competition to the benefit of the very many EU companies that depend on these container shipping services."

Competition concerns

The proposed transaction leads to the combination of two leading container liner shipping companies. Maersk Line is the largest container shipping company, while Hamburg Süd is number nine worldwide.

Like several other carriers, Maersk Line and Hamburg Süd offer their services on trade routes through cooperation agreements with other shipping companies. These are known as 'consortia' or 'alliances' and are based on vessel sharing agreements where members decide jointly on capacity setting, scheduling and ports of call, which are all important parameters of competition.

The Commission examined the effects of the merger on competition in this specific market for container liner shipping on seventeen trade routes connecting Europe with the Americas, Asia, the Middle-East, Africa and Australia/New Zealand.

It found that the merger, as initially notified, would have created new links between the previously unconnected entities Maersk Line and five of the consortia Hamburg Süd belongs to. According to the Commission's analysis, this  would have resulted in anti-competitive effects on the corresponding five trade routes (Northern Europe and Central America/Caribbean; Northern Europe and West Coast South America; Northern Europe and Middle East; Mediterranean and West Coast South America; Mediterranean and East Coast South America).

In particular, these links could have enabled the merged entity to influence key parameters of competition, such as capacity, for a very large proportion of those markets, to the detriment of their commercial customers and, ultimately, of consumers.

The proposed transaction would also create limited links between Maersk Line and Hamburg Süd in the markets for short-sea shipping and 'tramp services' (unscheduled, on demand shipping), as well as limited links between the two companies' activities in container liner shipping and the container terminals, harbour towage, freight forwarding, container manufacturing and inland transportation sectors where Maersk Line or other companies belonging to the Maersk Group are active.

However, in both areas, the Commission found no competition concerns, in particular because several other service providers are active in these markets.

Commitments

In order to address the Commission's competition concerns, Maersk has offered to terminate the participation of Hamburg Süd in the five consortia, entirely removing the problematic links between Maersk Line and Hamburg Süd's consortia that would have been created by the transaction.

Hamburg Süd will continue to operate as part of the five consortia during the notice period to guarantee an orderly exit.

However, a monitoring trustee will ensure that no anti-competitive information is shared between these five consortia and the merged entity during that notice period.

In view of the proposed remedies, the Commission concluded that the proposed transaction, as modified, would no longer raise competition concerns, a decision that is conditional upon full compliance with the commitments.
 

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