Competition laws are built around three pillars. The first pillar is a general prohibition of agreements or concerted practices between undertakings which have the object or effect of restricting competition. This rule prohibits cartel conduct and certain other types of restrictive cooperative practices between competitors. The second pillar is a prohibition on the abuse of market power. This rule makes it unlawful for undertakings with market power to restrict competition by engaging in exclusionary or exploitative conduct. The third pillar is a regime of merger control aimed at preventing harmful business “concentrations”. This often translates into requirements for notification and clearance of sizeable M&A transactions.
The first of these pillars, making certain restrictive agreements unlawful, has raised the most issues in the transport industry. For historical reasons, but also for reasons of market efficiency, transport networks rely on a large degree of cooperation among market players. This is why regulators have historically exempted large sectors of the transport industry from the application of this prohibition against restrictive agreements. Accordingly, the aviation or shipping sectors have enjoyed generous exemptions or immunity regimes in jurisdictions with established competition law such as Europe, the US, Japan or Australia.
In more recent years, however, there has been a move away from broad exemptions in these sectors. In late 2008, the European Commission withdrew its block exemption for liner conferences, after a detailed investigation showing that there was no evidence that the liner shipping industry required such an exemption to operate. Similarly, most block exemption regulations in the aviation sector have been repealed. In the US, recent legislative proposals were introduced to withdraw the current antitrust immunity regimes for international aviation agreements and shipping conferences. In other jurisdictions, such as Australia or Canada, there have also been efforts to reduce the scope of the existing exemption regimes: limited exemptions remain for registered international liner shipping conferences, but they do not cover the most restrictive provisions - such as mandatory adherence to collective tariffs - and the agreements remain subject to regulatory oversight by the competition authorities. Finally, in jurisdictions such as China or Indonesia which have more recent competition law regimes, these liner shipping agreements do not benefit from any express exemptions.