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Blue Bonds: Making a splash in the Capital Markets
In 2018, the Republic of Seychelles launched the first-ever “blue bond”, with the support of the World Bank Group and the Global Environment Facility.
Global | Publication | February 2024
In 2009, the European Commission (EC) adopted the Consortia Block Exemption Regulation (CBER) to facilitate certain collaborative arrangements amongst shipping companies operating joint liner shipping services. This regulation aimed at promoting economies of scale and ensuring benefits were equitably shared, particularly supporting small and medium-sized enterprises (SMEs). Despite being extended in 2014 and 2020, with the last extension set to expire on April 25, 2024, the EC has decided against further extension due to significant changes in the competitive dynamics within the liner shipping industry.
The CBER was designed to provide a "safe harbour" for consortia that enabled shipping companies to achieve efficiencies and offer competitive pricing without breaching EU antitrust laws. It initially was scheduled to expire in 2015 and was subsequently extended due to the positive outcomes observed, such as reduced costs for carriers and lower prices for consumers, without adversely affecting competition.
Following a call for evidence launched in August 2022, the EC published a Staff Working Document leading to the decision not to extend the CBER beyond April 25, 2024. This decision was influenced by changes in the competitive landscape of the liner shipping industry, including market concentration among fewer dominant players and increased cooperation through alliances, resulting in the reduction of small and medium-sized carriers, the primary beneficiaries of the CBER.
Post-CBER, shipping consortia will be subject to the general EU antitrust framework, notably stricter scrutiny under the Specialisation Block Exemption Regulation and the new Guidelines on horizontal cooperation agreements. The permissible market share threshold for consortia will decrease from 30% to 20%, necessitating carriers to reassess their consortia agreements for compliance with antitrust laws on a more individual basis.
The end of the CBER signifies a pivotal change for shipping companies, especially SMEs. Carriers previously benefiting from the CBER exemption must now conduct self-assessments to determine if their consortia agreements risk being deemed anticompetitive. If so, they must evaluate whether individual exemption criteria under Article 101(3) TFEU are met. This exemption requires demonstrating tangible consumer benefits, passing on efficiencies to customers, limiting restrictions to what is necessary, and not eliminating competition entirely. Unlike the CBER’s presumption, these criteria must now be demonstrated on a case-by-case basis. Companies currently engaged in consortia should assess the viability of continuing unchanged, modifying, or terminating their cooperation before the CBER expires.
In lieu of consortia, there may be a pivot towards Vessel Sharing Agreements (VSAs) (bilateral agreements negotiated between two companies). These agreements may involve “slot swaps”, exchanging space on each other’s ships, or purchasing space on another operator’s vessels based on a slot contract, whether used or not. Unlike consortia, these types of agreements do not include a common marketing and negotiation strategy between carriers.
The non-renewal of the CBER marks a significant regulatory shift, necessitating a strategic reassessment by shipping companies, particularly those reliant on consortia for operational efficiencies and market competitiveness. As the industry transitions towards this new regulatory environment, stakeholders must carefully evaluate their collaborative practices to ensure compliance, sustainability, and competitiveness in the evolving market landscape.
Publication
In 2018, the Republic of Seychelles launched the first-ever “blue bond”, with the support of the World Bank Group and the Global Environment Facility.
Publication
On 8 May 2025, the Court of Justice of the European Union (the CJEU) delivered its ruling in case C-581/23 (the Ruling), providing guidance on one of the conditions for an exclusive distribution agreement to benefit from the block exemption under Article 4(b)(i) of the 2010 Vertical Block Exemption Regulation (the VBER)1, notably the so-called ‘parallel imposition requirement’.
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Antitrust authorities are increasingly aggressive in pursuing new theories of harm, pushing the boundaries of what amounts to an antitrust violation, and expanding the use of current legislation and regulation to fit a new era of issues.
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