MARITIME ALLIANCES AND EU COMPETITION LAW

PART I

VESSELS AND THE MARKETS THEY TRADE

1. Background

In spite of the development of other means of transport, approximately 90 percent of international trade in goods is currently carried out by sea. When it comes to the carriage of goods, maritime transport is undoubtedly the principal means.[1]

Shipping has always been an international business and the recent trend of globalisation means that sea transport will continue to play a pivotal role in trade, particularly in the European Union.[2] No other continent has such a long shoreline in relation to its total surface area to serve its trade. The concentration of ports in the European Union is the highest in the world and the EU-controlled commercial fleet is by far the largest in the world. Maritime transport also covers several trades as well as produces subsequent services. According to the UNCTAD 2004 Review, the broader maritime industry with the actual transport operation, the financial services, the insurance, administrative, IT sector and the technical management sector employs about three million people in the European Union alone.[3]

1.2 Categories of Vessels and Transport Service

Two-thirds of world trade (in terms of weight) and one-third (in terms of value) are carried by three main categories of ocean borne vessels (notably through bulk and container carriers). Based on several criteria, such as their design, size, function, carrying capacity and equipment (gear), the general theory of maritime economics classifies vessels to five main groups:[4]

i. Oil tankers;

ii. Bulk carriers (Bulk carriers and Combination carriers);

iii. General cargo ships (Multi-purpose and project vessels, roll-on roll-off (ro-ro) cargo), general cargo vessels;

iv. Container ships;

v. Other ships (Liquefied Petroleum Gas carriers (LPG), Liquefied Natural Gas carriers (LNG), chemical tankers, specialised tankers, reefers, offshore supply, vessels, tugs, dredgers, cruise, ferries, other non-cargo ships.

In parallel, shipping operations are traditionally categorised in three major categories depending on the type of vessels and regularity of service they provide to their customers (charterers or shippers). In particular:

i. Liner shipping;

ii. Tramp shipping; and

iii. Industrial shipping.

Liner, tramp/bulk and industrial shipping differ, in respect of the patterns of voyages, their design, types of cargo they carry, types of contracts and level of alliances they are entered to. These differences limit the markets that these vessels are able to serve and to group them as a single maritime-industry would be misleading.

1.2.1 Liner Shipping

Firstly, a liner provides shippers with a scheduled service where, usually, container ships calling at certain ports follow fix routes (i.e. the liner routes). Her design is an important point of distinction, she has the capacity to transport large and variable numbers of goods in parcels or cargo units (containers). Goods moved in liner services are high-value ones. Those vessels are either manufactured or semi-manufactured goods; accordingly, liner vessels are classified into the following categories:

1.2.1.1 Liner Shipping Vessel Types

i. Very Large Container Ship (VLCS) that crosses the Suez Canal and the Singapore strait, yet few ports in the world can accommodate her;

ii. Neo Panamax Ships that transits the expanded locks of the Panama Canal with up to a maximum 49m beam and 366m length overall (LOA);

iii. Panamax Container ship above 3,000 20-foot equivalent units (TEUs) with a beam below 33.2m that transits the old locks of the Panama Canal;

iv. Feeder, having an average capacity of carrying 300 20-foot equivalent units (TEU) to 1000 TEU, that usually collects shipping containers from different ports and transport them to central container terminals;

v. Small Container vessel, being small and flexible she serves short and medium distances and underdeveloped ports.

1.2.2 Tramp Shipping

Secondly, in tramp operations, vessel routing and scheduling are not fixed, but dependent on where cargo (charter) is available.[5] Most tramp operations are in bulk trades. As bulk vessels trade around the globe they pursue of profitable freight in a dynamic but long-term unpredictable market conditions. This is due to reasons, relating – but not limited – to:

i. Operating in spot market. A bulk carrier (tramper) carries simpler and homogeneous cargo in very large quantities; therefore, the vessel is designed to entirely utilise (its) carrying capacity for carriage of one type of cargo;

ii. Non-fixed vessel scheduling and routing. A tramper does not have a fixed schedule and repeated itinerary over a long period of time, or predetermined schedule of departure as it is to be engaged by one/two users as and when their need arises. This spot market effect is somehow reduced with long time charterparties or through entering a pool;

iii Offering services at terms and conditions, including freight/hire charges, which are not fixed and given but are negotiable.

Overall, the EU Commission has identified a series of characteristics specific to this specialised transport mode which render it distinct from liner services. Tramp vessels are generally categorised as follows:

1.2.2.1 Tramp Shipping Vessel Types

A tramp ship (tramper - bulker) is a contract carrier. Unlike a liner, which has a fixed schedule and a published tariff, she carries commodities in bulk (in holds or tanks) and trades in all parts of the world in search of cargo, primarily bulk cargo. Concordantly, tramp freight is generally influenced by supply and demand, and determined by ships that are leased by charterparties (voyage, time and demise) that are drawn up between the shipowner and the charterer.

1.2.2.1.1 Dry Bulk and Ore Carriers

i. Capesize bulk carrier of 100,000 dwt and above, too large to transit the Suez Canal (Suezmax limits) or Panama Canal (Neopanamax limits), that crosses either the Cape of Good Hope or Cape Horn and traverses between oceans;

ii. Panamax bulk carrier of 65,000-99,999 dwt that transits the Panama Canal;

iii. Handymax bulk carrier of 40,000-64,999 dwt, smaller than the above categories, capable of serving short to medium transport requirements;

iv. Handysize bulk carrier of 10,000-39,999 dwt, capable of travelling to small ports with length and draught restrictions, as well as those lacking the infrastructure for cargo loading and unloading.

Thirdly, an industrial operator owns the cargo and controls the ships, aiming to minimise the cost of cargo delivery. They are mostly active in the hydrocarbon and petrochemical industry, such as crude oil, natural gas and other important energy sources and petrochemicals (liquified petroleum gas, ammonia, propylene and vinyl chloride monomer - VCM). In particular:

1.2.2.1.2 Industrial Shipping - Tankers and Gas Carriers

As regards this group, the EU Commission has identified a series of characteristics, which render it distinct from liner services and relatively discrete from traditional bulk carriers of spot market. They involve the provision of quasi regular services for a particular cargo type, i.e. crude oil, natural and petroleum gas. The service is usually provided on the basis of contracts of carriage using specialised vessels technically adapted and/or built to transport specific cargo.

v. Very Large (VLCC) and Ultra Large Crude Carrier (ULCC) of 200,000 deadweight tons (dwt) and above;

vi. Suezmax crude tanker of 120,000-200,000 dwt that transits the Suez Canal;

vii. Aframax crude tanker of 80,000-119,999 dwt, optimal for short-to medium-haul crude oil transport that serves even non standardised ports;

viii. Panamax crude tanker of 60,000-79,999 dwt that transits the Panama Canal;

ix. Large liquefied Natural Gas (LNG) ship for cargo spaces between 125,000-267,000 cubic metres capacity;

x. Medium size LNG ship, for cargo spaces between 25,000-125,000 cubic metres capacity;

xi. Smaller LNG ship, between 1,000-25,000 cubic meters capacity, operating in shortsea routs and certain areas, such as Norway and Japan;

xii. Fully-refrigerated Liquified Petroleum Gas (LPG) type ship, for cargo spaces between 10,000-100,000 cubic metres capacity;

xiii. Semi-refrigerated LPG type ship, for the cargo spaces around 7,500 cubic metres capacity; and

xiv. Full pressure LPG type ship, for cargo spaces less than 4,000 cubic metres capacity.

In view of the above, we see some five and fourteen main classifications of ships for liner and tramp shipping respectively.

Yet, as already mentioned, type and design of ships is not the only criterion available: Contractual terms are another point of distinction between liner, tramp and industrial shipping services. In the former, the relationship between charterers and carriers is regulated by standard printed forms of contracts (such as bills of lading or similar documents) whose terms and conditions are directly prepared by carriers without any negotiation with their contractual counterparts, except as regards tariffs. In tramp and industrial shipping, the trader normally charters and pays a

negotiated rate for the whole ship, either for a voyage or for a period of time.[6] Also, liner and tramp services are provided on local and international scales. Liner shipping services call in liner transnational routes and tramp shipping services call in random ports (known as the spot market).

Another significant difference between the sectors is the degree of cooperation among shipowners. Cooperation among liner shipowners has always been structural and the predominant forms of alliance in liner shipping has been the conference, global alliance, full function merger or the consortium.[7] The quest for cooperation among competing shipping lines, which has been explained using sophisticated economic theories, has lasted many decades and still continues to fascinate some scholars. Synergy in tramp shipping, in contrast, is a practice of the last fifteen years or so and is expressed mainly by tramp pools or other forms of partial function alliances on which legal and economic research is relatively limited.

1.3 The Phases of International Shipping Liner Alliances

A shipping alliance represents a type of cooperative agreement among ocean carriers. Alliances are formed as to strategically cover different trade routes thanks to the cooperation of various members on a global scale. An alliance is driven basically out of the necessity to rationalise and reduce operational costs, which in shipping represent over 67% of the total running cost. Both of these costs are variable and may fluctuate at any time. Shipping lines under harsh economic conditions are unable to provide service coverage alone without their ships being tied up on a specific route for weeks on end leaving other routes un-serviced. Against the is immense pressure, shipping alliances help to reduce these variable costs through the usage of shared resources like networks, port terminals and ships along specific routes. In contrast, smaller lines capitalise upon that extended service coverage and resources without investing in an increase in fleet size.

Nonetheless, shipping synergy agreements also raise concerns as – besides reducing uncertainty in the market – they may also undermine effective and workable competition. In particular, agreements or concerted practices relating (inter alia) to price fixing, limitation of service, capacity management, market sharing, information

exchange agreements, loyalty arrangements, rebates, covenants not to compete, et cetera are anticompetitive if the intention is to either influence the conduct of the market or to disclose intended future behaviour to competitors.

For a long time, scholars explained the need for shipowners to avoid competition among themselves using economic theories, in particular:[8]

It was maintained that shipping business demonstrates peculiarities that cannot cope with a competitive market model since, inter alia, (a) fixed costs are proportionately much higher than variable costs, (b) entering and exiting a given market (i.e. a liner service) is not easy and entails substantial shifting costs, (c) the unit of supply in the liner shipping market (i.e. the vessel) does not correspond to and is much bigger than, the unit of demand (i.e. the parcel or cargo unit), making it quite awkward for the carrier to constantly adapt its offer in order to match the fluctuations of demand. These reasons were an obstacle to conceptualising the application of an ideal competition model in the liner sector. In fact, some decades ago, it was considered to be a matter of common sense to state that if liner carriers were to compete among themselves for pricing, the resulting “rate wars” and “destructive competition” would undermine the stability of trade.[9] Until 2006, the special and uniform practice of legalising the conferencing system has been established worldwide, offering protection for liner conferences in many major maritime countries.[10] Conference members had fixed, agreed and published schedules and rates in order to rationalise the capacity and frequency of the services offered to their customers. Similarly, the contractual terms with shippers were identical for all conference shipowners. Shippers were offered the same terms and conditions of carriage independently from the liner that they were using on the trade

served by the conference. While these contractual conditions might have provided the trades with freight stability contributing to the stability of transport costs, they had also restricted competition, as it happened when shippers were granted rebates on tariffs if they granted exclusivity to the conference members.[11] Eventually, the prohibition of shipping conferences, in 2006, made partial function alliances (joint ventures) the main avenue for greater cooperation of shipping companies.[12]

Four main generations of alliances in liner shipping were developed between 1998 and 2019. The first two generations of liner shipping alliances were facilitated by globalisation and the financial position of the carriers. The growth of world trade and increased internationalisation of the economy in the 90s, made it essential for container shipping companies to extend their market coverage globally. At the same time, the costs of providing such operations were increasing due to the need to deploy ever larger and costlier to build vessels.[13]

1.3.1 Period 1996 - 1998

The first generation of liner shipping alliances emerged in 1996 and lasted until 1998. They were ambitious in scope, as they were made up of an extremely large share of the vessels held by the individual carriers, subsequently these were short-lived in practice, with the exception of the Grand Alliance.[14]

1.3.2 Period 1998 - 2012

The second generation of alliances (1998-2012) proved more resilient, with three main alliances – New World, Grand Alliance and CKHY – active throughout that period with only a few minor changes in composition made. The main model of these alliances was the combination of one dominant carrier with several smaller carriers.[15]

While the conference system was gradually metting its demise, especially in the USA and the EU, owners started to appreciate other forms of cooperation - such as mergers, consortia- or independent commercial practice more than the conference system, which had been bureaucratic and demanding, as it needed constant cooperation and supporting administrative mechanisms. Moreover, there was also the legal scrutiny over the competitive restraints produced by the conferences. In March 2003, the OECD published a Report on Competition in Shipping which severely criticised the need for conferences to have antitrust exemption.[16] In light of these developments, the EU Commission decided to re-examine Regulation 4056/86 that granted block exemption to liner conferences.

The Commission adopted a three stage approach: the first being a consultation paper in March 2003,[17] followed by a White Paper published in October 2004,[18] and thereafter, a legislative proposal for a Council regulation to repeal the conference exemption on 14 December 2005.[19] The proposal to repeal the block exemption was thus the result of a thorough three-year process of consultation, review and study. The Commission’s findings were that the exemption did not fulfil the four cumulative conditions of Article 81(3) which were necessary for it to continue. These were:

– the identification of concrete benefits resulting from price fixing and capacity regulation;

– the passing on of a fair share of proven benefits to consumers;

– the indispensability of price fixing and capacity regulation for the provision of reliable services; and

– that competition is not eliminated in a substantial part of the market.

Following these recommendations, the EU became, with effect from October 2008, one of the first jurisdictions to put an end to the possibility of the liner carriers to meet in conferences, fix prices and regulate capacities with EC Regulation 1419/2006.[20]

At the same time, the EU Commission has granted a Block Exemption on Maritime Consortia with the Commission Regulation 906/2009.[21] It declares Article 101(1) TFEU not applicable to certain types of agreements between maritime shipping companies to cooperate in “consortia”, i.e. in the provision of regular and scheduled international maritime shipping services.

1.3.3 Period 2012 - 2017

Due to this crucial change in the legal regimes and the administrative perplexities of the conferences, even largest carriers started to move into alliances. This has started with the third generation of alliances (2012-2017) that could be considered hybrid.

– an alliance with one dominant and many smaller carriers (G6);

– an alliance with one dominant and two smaller carriers (O3);

– an alliance with the two largest global carriers;

– an alliance with various dominant carriers (CKHYE).

In addition, it was a constellation that was considered unbalanced and unstable, as the market shares of the four alliances were fairly different; so many industry observers predicted that this constellation would disintegrate rather quickly. This happened indeed, due to many cross-alliance mergers and acquisitions since 2015.

1.3.4 Period 2017 - Present

Finally, the characteristics of this fourth generation[22] of alliances (2017-currently) are fundamentally different from earlier alliances as we fewer groups than ever, in fact we observe conditions resembling to monopoly.[23]

Currently (2017 - present) there three (3) major alliances, with no dominant partners, having an international impact:[24]

– THE Alliance;[25]

– Ocean Alliance;[26]

– 2M Alliance.[27]

The above three global alliances (2M, Ocean and THE Alliance) are operational since April 2017 regroup the eight largest container carriers of the world. The alliances represent around 80% of overall container trade and operate around 95% of the total ship capacity on East-West trade lanes, where the major containerised flows occur. In fact, it a unique phenomenon in the history of liner shipping, rendering the industry as natural oligopoly (infra figure 16, page 270).

This could have various consequences: the reduction of the number of carriers per alliance could make decision processes easier, but the equivalence of carriers could also imply stronger conflicting intra-alliance dynamics, especially when complementarities between carriers are lower than before.

In this context, in March 2020, the Consortia Block Exemption Regulation 906/2009 has been renewed for another four (4) years (i.e. until 2024) by virtue of Regulation 2020/436, amending it only as regards its period of application.[28] However, there is a conviction that the forthcoming period would ensure greater analysis of individual alliances and perhaps more effectively deter any anticompetitive conduct in the sector. In the meantime, in order to maintain legal certainty, the European Commission could provide new guidelines on how to treat liner shipping in EU antitrust law. Perhaps in the future, a Regulation may have equally limited scope. At least, the OECD’s Report (2018) assumes that a future regulatory intiative may exclude joint purchasing by alliances.[29]

2. The Paradox of Regulatory Reform in a Dynamic Market

With the exception of the EU and the US, all other countries have shown some reluctancy in abolishing the conference system and assume that conferences protect against destructive competition among liner companies that may overheat the sector. Legislative and judicial developments on EU Competition Law and the greater EU Maritime Policy are creating a new territory – so that we may be speaking of a “territorialité communautaire”,[30] or better, a “Euro-territoriality” that could create, at least temporarily, questions and possibly frictions with the outside.[31]

The contrast of the EU’s judicial and legislative approaches with the global lex mercatoria stimulates research interest. Price fixing in freight rates is now prohibited

in the EU and is directly caught by article 101 of the TFEU.[32] Despite the abolition of conferences, alliances (in the form of consortia and pools) continue to exist. Maritime transport synergies are well established and cover substantial portions of global trade. The EU’s approach did not target shipping alliances and it is generally acknowledged that provided competition remains effective, alliances in shipping are beneficial to the general economy.

The second paradox is that the original scheme behind the abolition of conferences and the repeal of any exemption on maritime consortia has been the establishment of fair and dynamic competition among the liner companies. That was also evident that the key motivation behind the EU’s reform was to shield the economy from any increase in freight rates that could jeopardise global trade stability.[33] As acknowledged in the UNCTAD 2011 Report on Maritime Transport,[34] transport costs are influential for a country’s competitiveness in trade. Excessive shipping costs, often surpassing the cost of customs duties, are considered a major barrier to trade.[35] Yet, currently we observe situations that resemble monopsony or oligopoly.

Our view is that liner shipping is a very dynamic and fragile market and the argument of destructive competition may be still valid. Understanding how freight rates and transport costs are determined and how they influence trade flows, volume, patterns and structure is crucial. Transport costs (expressed in this case, as freight rates) are determined by inter alia, distance, competition in shipping and port services, economies of scale, trade imbalance, capital costs of infrastructure and type and value of goods.[36] Liner and tramp shipping are, without doubt, the most important modes of transport used for international trade. With the exception of rare cases of general average, the distribution of risk of transport venture between providers of service (shipowners and insurers) and users is disproportional as shipowner and cargo insurers undertake the great portion of risk. In the

majority of circumstances, consumers / maritime services users do not engage themselves in the business of transport and prefer to leave shipowners (which are undoubtedly more capable) to manage the shipping risk (unless they are demise charterers); hence they rely on using transport services on demand. There are many sectors, notably agricultural and iron-ore cargoes, where producers are in difficulty to predetermine the volume of cargo (harvest) they will have in future or how many ships will they be required to transport their products on demand. It is thus far more convenient for the users to sign a contract of carriage only when they need it. In this context, the intensity of the risk becomes dual-sided based on the demand-supply principle. Hence, the users - clients may be fortunate enough to secure cheap freight if there is abundance of available vessels, otherwise may pay expensive freight if there is limited offer of available vessels and they make the last-minute arrangements. Yet, in both situations, ships are always affordable. In spot shipping, shipowners take the bigger share of the entrepreneurial risk in view of the investment they have committed and its return (ROI). Thus, shipowners aim at the ROI by taking the well-known “shipping risk”. They back their judgement that their services will be in demand and provide a worthwhile return on the invested capital. With so much at stake, it is no surprise that shipping, especially spot maket, occupies much the same position as game theory mathematics. These parameters are genuine properties of a whole sector. This research takes into consideration the majority of those properties for our competition law analysis.

3. Scope

It is against this background that this book investigates the competition law issues in liner shipping consortia and tramp shipping pools. In light of the recent changes in the EU competition law regime in shipping, which repealed the block exemption in liner conferences, we discuss some specific features of the maritime sector in order to establish compliance of partial function (limited) horizontal cooperation agreement in shipping (that is, liner consortia and tramp pools) with articles 101 and 102 of the TFEU. In particular, it will explore the following questions:

What are the competition law issues in partial function (limited) cooperation agreements in liner and tramp maritime transport?

Which sector-specific factors and particularities affect (predominantly EU) competition law?

Schematically, the structure of the book is the following:

It first describes the specific properties of the sector and relates them to partial function consortia and pools that do not directly fall within the EC Merger Regulation.

It then identifies cases that fall foul of articles 101 and 102 TFEU. It discusses the nature of the joint venture agreement as whole and examines particular distortions in competition as result of consolidation and market power of consortia and pools.

The analysis of competition law issues in shipping alliances require the examination of four constituent elements: the relevant market, the indicators of dominance, whether alliance agreements comply with Article 101 TFEU and the abusive conduct by dominant undertakings (that is, the organized categories of abusive conduct). It is important to reflect on each of these areas as the research intends to demonstrate the particularities of the maritime industry and their influence on competition law.

In addition to the traditional analysis, the study explores how some particular properties of the sector impact these aforementioned factors. We take into account factors like economies of scale, the geographic and time parameters which determine the relevant market, the fixed and average costs, capital access and costs in order to determine dominance and market power. These findings provide the basis for further research in related fields of law, such as international law (e.g. extraterritoriality of EU Competition law in idiosyncratic and global industries), transport law (the consequences of alliances in air, maritime and multimodal transport) and interdisciplinary research with the involvement of economics and systems theory.

The choice of liner and tramp loose consortia, that is, the partial function forms of cooperation that are currently predominant in shipping, is made based on the criterion that liner consortia are a kind of successor to the liner conferences and the tramp shipping pools are the most common form of synergy in tramp shipping.

Having said the above, we investigate the following topics:

– The special EU competition law issues that arise in ocean borne liner shipping services carried out by liner maritime firms that chiefly use container vessels whether or not they act independently, or through partial function (limited) cooperation agreements, that is, the liner consortia;

– The special EU competition law issues that arise in ocean borne tramp bulk shipping services[37] – carried out by independent companies or through partial function joint ventures, the most predominant of which are the tramp shipping pools.

– The special properties of the maritime service, which play an important role in the effective competition of the industry, that are either common in both sectors (liner and tramp) or particular to one of them and affect the competition law analysis.

On the whole, several research purposes are met within the study, such as:

– Evaluation of the effectiveness of the existing legal tools to define a relevant shipping (liner and tramp sector) market;

– Evaluation of compliance of cooperation agreements with article 101 TFEU and recording the anti-competitive practices of liner consortia and tramp pools;

– Assessment of the market power indicators in maritime transport;

– Alternative ways to deal with problems related to market definition.

4. Methodology

We examine the matter from a legal doctrinal perspective of competition law, incorporating the methodology and structure of competition law bibliography. In addition, the study researches the available bibliography that refers to the economic functions of the industry and investigates multiple fields as the study of competition law is interdisciplinary in nature.

This was been a challenging task as for many years (2000-2007) there was no specialised bibliographical information. That changed in 2007 with the publication of important works by Luis Ortiz Blanco (2007),[38] Alla Pozdnakova (2008),[39] Antonis Antapassis, Lia Athanassiou and Erik Røsæg (2009),[40] Philip Wareham (2010),[41]

Jason Chuah (2005-2009),[42] Francesco Munari (2005-2012),[43] and Christopher Townley (2011).[44] The fundamental competition law analysis was based, but not limited, to the works of Richard Whish and David Bailey,[45] and Christopher Bellamy and Graham Child.[46]

The book extends the research further by informing legal analysis with sources from microeconomics and maritime economics, like Stopford,[47] Grammenos[48] and studies from maritime economics. The study also includes special sector specific scholarly reports in the Maritime Sector such as the Fearnley Consultants Report on Tramp Shipping,[49] and the OECD and UNCTAD Reviews on Maritime Transport.

Qualitative data is used to exhibit the properties of the maritime system, its functions and its interaction with competition law in relation to the synergistic activity of shipping companies. The maritime sector is particularly idiosyncratic and for the research to be valid and have verifiable objectives and findings, a profound global understanding of the way it is structured and operates is required.

There have of course been some challenges:

– First and foremost, current legislation and case law are limited to liner shipping conferences and have not produced any cases related to tramp shipping pools;

– Secondly, no cases of market consolidation by any tramp shipping pool have been reported. In fact, the available market data confirms the case law and legislative guidelines for the assumptions about the competitiveness of the industry. In 2008, when the guidelines on the application of competition rules to maritime transport services (henceforth the “Guidelines”) mentioned:

“market shares provide useful first indications of the market structure and of the competitive importance of the parties and their competitors. The Commission interprets market shares in the light of the market conditions on a case-by-case basis”.[50]

– In our view, the wording “case-by-case” simply substantiates the competitiveness assumption about shipping markets.

In particular, the following methods of qualitative research are employed:[51]

We set selection criteria based on resources from competition law, maritime competition law and maritime economics. Cases in competition law that refer to transport are given priority. Likewise, resources from maritime economics are prioritised and used to exhibit the properties of the maritime transport sector;

Through synthetic thinking, we examined the legal framework of competition law in order to define the elements that have to be taken into account in a shipping market. The intention here is to present the properties of a certain shipping sector and their effect on the relevant market. We start from the basis of “what”, “where”, “when” (quantitative data) and we expand to “why” and “how” (qualitative investigation) of decision-making for the purpose of discovering underlying meanings and patterns of relationships. The study is, in principle, theoretically-driven and employs legal research in conjunction with economic findings.

Overall, the book employs a combination of analysis and synthetic thinking to explain market behaviour and the properties of maritime transport and we make the

necessary suggestions in conclusion. Our research is not limited to analysing legal relations alone as they derive from, or relate to, the existing legal framework. That may not be inclusive enough to cover all of the shipping markets’ phenomena. Instead, we demonstrate from the larger whole, the key properties of the sector (the submarkets and their divisions) in light of which we reconsidered the main research hypothesis. Analysis and synthesis are complementary: neither replaces the other. We incorporate both.

This methodology coherently drives the argumentation and returns to the original hypothesis-assumption: Shipping, either regulated or deregulated, is always subject to structural dynamic volatility (the phenomenon) and that is what guarantees efficient global competition; moreover, because of this phenomenon, both types of maritime transport (liner and notably tramp) have self-regulating market properties.

In addition, the analysis of relevant markets and indicators of market power has shown that shipping is basically an open market. The special conditions prevailing in the relevant market may therefore need to be aggregated with other – preferably neighbouring – markets in order to validly assess the legitimacy of market behaviour.

The need to research this subject consolidated once it was confirmed that the dynamic element of the shipping market is central to any interpretation of competition law issues in the market. In particular, besides the main and collateral outcomes, the monograph produces two significant proposals:

– First, the book promotes the idea that shipping is organised in multiple interconnected and relevant markets depending on the degree of linearity in the service (liner vis-a-vis tramp) and the presence of the joint venture in multiple markets. The dynamic element encompasses concepts such as risk, time, cost and capital; the majority of which are regarded by competition law as barriers to entry. These are also natural barriers that discourage candidate shipowners from commencing their entrepreneurship and operations. The book further assesses in this context that these are all due to the dynamic and inherent instability of the shipping sector, which at the same time guarantees its effective competitiveness.

– Second, the book concludes that aggregating across markets is an appropriate choice to determine the true ambit of the relevant markets and clearly evaluate the public policy considerations of competition law, including the benefits to the consumer. This aggregation has wide applicability, especially in open markets like tramp shipping.

The European Union’s current regulatory regime abolished the block exemption on liner conferences and clarified that tramp shipping law is subject to competition law. This study examines whether the purpose of these legislative initiatives is accomplished and to what extent.