EU raids lines over suspected price-fixing

European Union officials have raided the European offices of a number of shipping firms as part of a probe into suspected price-fixing in the sector.


Singapore's Neptune Orient Lines (NOL), Hong Kong-listed Orient Overseas (International) Ltd (OOIL), Taiwan's Evergreen Marine and South Korea's Hanjin Shipping said that were all part of a European Commission investigation into the possible violation of anti-trust rules, reported Reuters.


European Union regulators also raided major lines such as Danish group A P Moller-Maersk, France's CMA CGM and Germany's Hapag-Lloyd.


The European Commission (EC), which can fine companies up to 10 percent of their global revenues for breaching EU rules, did not identify the companies raided.


"We can confirm that the EC raided our office in the UK's Levington," OOIL spokesperson Stanley Shen said. "It's a very general raid and not carrier-specific, it seems."


Depressed freight rates have weighed on container lines in recent months, so the EU investigation is probably focused on early 2010 when rates, especially to and from Europe rose sharply as the sector recovered from a downturn, analysts said.


"I think what happened (early) last year was on the Europe lanes," said Suvro Sarkar, an analyst at DBS Vickers Securities in Singapore. "We saw rates shoot up quite fast in a very short period of time, probably that is what prompted them (the European Commission) to investigate the liners."


Global container shipping firms have been squeezed by a sharp fall in rates, driven by over-capacity and limited demand, since the start of the year and rising fuel charges. However, the sector is expected to rebound later this year.


"Considering the current weak shipping rates, the price-fixing practice, if any, should be very limited," said Jimmy Lam, a shipping analyst at Daiwa Securities.


"The size of global idle fleets has been shrinking and is back to pre-financial crisis levels. Many shipping companies are suffering losses in European routes," he added.


NOL, the world's seventh largest container shipping firm, said that the EC officials inspected its Uxbridge office in the United Kingdom.


"NOL understands that the intent of the inspection is to identify the existence of any evidence of infringement of anti-competition rules relating to the liner shipping industry," the company stated.


The Singapore firm, in which Singapore state investor Temasek Holdings holds a 66 percent stake, said it believes that it is in "compliance with the anti-competition regulations and is cooperating fully with the European Union."


Evergreen Marine said European Commission inspectors visited its London office as part of an investigation into major container carriers.


"Evergreen will continue to fully cooperate with the EC agents in their efforts," a company spokesperson said.


In Seoul, Hanjin Shipping said its Hamburg office in Germany had been inspected by EU officials and added that it would also fully cooperate with the investigation.


A P Moller-Maersk, which owns the world's biggest container shipping company Maersk Line, said it was raided but its practices were in compliance with EU competition law.


The commission's probe covers the period from late 2008, when liner shipping conferences were banned, to the present, Maersk's spokesman Michael Storgaard said.


Liner shipping was earlier organised in groups called "liner conferences", which met to discuss market conditions, freight rates and other common concerns under a block exemption from European competition rules.


But the European Union decided in 2006 to ban the practice as against competition rules and the ban took effect in 2008.
The shipping sector is not alone in being investigated for suspected price fixing.


The EU last year ruled that several airlines were involved in cargo price-fixing.
(Source:http://www.cargonewsasia.com)