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ONE
expert legal opinion suggests EU regulators
sitting in judgment on the proposed P3 and
the expanded G6 alliances will opt for approval,
but with modifications, reports Lloyd's
List.
Changes
could be minor; demanding stronger measures
to ensure information is kept confidential,
or major such as insisting the alliances
could go ahead, but with fewer members.
"It
is my instinct that it will not block the
whole partnership," said Brussels-based
McGuire Woods partner Matthew Hall, who
specialises in the EU regulatory area.
"My
instinct would be that in this kind of a
market, where there seems to be a clear
need for some kind of consolidation, that
the P3 Network will ultimately be okay,
possibly with some fiddling around the edges,"
he said.
If
the P3 can show cost saving will be passed
on to customers, they could be given an
exemption, he said of the operational -
but not commercial - arrangement of Maersk,
MSC and CMA CGM, the world's three biggest
container shipping lines.
Likely
objections would be that the P3 network
will exceed the 30 per cent market share
limit set regulators, but Mr Hall said it
could win an exemption if cost savings were
to be passed on.
"The
key is having to prove that these benefits
are going to be passed on. Then you get
into who their competitors are, and that
they are strong enough to force the P3 to
pass on those savings," he said.
P3
members argue that while they are united
operationally, they will run separate sales
and customer service operations.
But
Mr Hall said that structure could cause
regulatory concerns because a shared cost
base could produce pricing similarities.
Shippers
have spotted such risks. The German Shippers
Council (DSVK) said while the efficiencies
that the P3 Network will create cost savings
that will initially be passed on, but in
the long term, they will force smaller players
out, leading to decreased competition and
higher rates.
"Taking
a long-term view, the market power created
by the P3 can ultimately lead to deterioration
in quality and service," DSVK said.
P3
carriers will also need ensure access to
terminals will be open, said Mr Hall, adding
that anything that appears to restrict other
carriers will come under close regulatory
scrutiny.
Another
area that may be examined is the sharing
of confidential information between the
parties.
Shortly
after the P3 Alliance's announcement, the
G6 Alliance (NYK, Hapag-Lloyd and OOCL,
APL, Hyundai and MOL) announced that it
would expand its coverage to the transatlantic
and transpacific.
Said
Mr Hall: "The G6 Alliance's decision
to expand could be helpful for the P3 as
they can say there has already been a reaction
in the market that is going to increase
competitive pressure and therefore they
can argue they are going to have to pass
on the benefits they gain to their customers."
But
if two have a transatlantic market share
of 80 per cent as expected, this would set
off regulatory concerns. "You are getting
towards a consolidated market and the risk
is that it's heading towards duopoly,"
said Mr Hall.
"They
may not co-operate on price, but it would
be easy for the two biggest players to withhold
capacity. Not explicitly, but it is easier
for two parties to reach implied agreement
than if there are a number of parties in
the market," he said.
"So
they are going to have to show that this
wouldn't happen because there are other
smaller parties out there that would be
nipping at their heels," he said.
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