The carriage of goods by sea is generally regarded as a key sector for trade within the EU as well as globally. There is overwhelming economic evidence on the relevance of maritime transport for global trade and its impact generally on economic growth. According to an UNCTAD Report, the share of international trade carried by sea is around 80%, in terms of volume, and over 70% in terms of value. For less developed economies, the share is even higher.
Broadly, the maritime freight sector consists of two categories - bulk shipping which involves the carriage of mainly commodities, such as for example coal and steel in bulk, and container liner shipping which involves the carriage of all varieties of goods in containers of varying sizes. Liner shipping refers to the provision of regular, scheduled maritime freight transport, usually by container, between a range of ports at one end and a range of other ports at the other end. The provision of a liner shipping service involves a significant input in terms of numbers of vessels - for example, the operation of a weekly service between points in Asia and Europe would involve eight to nine similarly sized ships.
As regards carriage of passengers by sea, it is estimated that some 400 million passengers travel through EU ports annually. Passenger transport within the EU is provided mainly by national and intra-EU services with Italian and Greek ports accounting for some 74 and 70 million passengers respectively and handling a combined share of 35% of total number of passengers travelling through EU ports in 2017.
The Application of the Competition Rules to Maritime
While historically subject to sector-specific legislation and in particular, an exemption for liner conferences, today all forms of maritime transport fall under the scope of the general EU competition rules and Regulation No 1/2003, is now fully applicable to the maritime sector. There remains one exception, which relates to certain types of cooperative agreements called consortia.
The liner shipping industry has long been characterized by cooperative agreements. These agreements include liner-shipping conferences, whereby liner-shipping companies set common freight rates and regulated capacity, were widely practiced. These liner-shipping conferences were traditionally exempted from EU competition rules. Specifically a block exemption regulation for liner conferences - Council Regulation 4056/86 - exempted agreements between liner shipping companies from the general EU competition rules. Agreements on prices and other conditions of carriage on routes to and from the EU (i.e. price and capacity fixing cartels without offering any joint service to customers) were therefore permitted under certain conditions. These exemptions were based largely on arguments made by the industry to the effect that the specific nature of costs that characterize the sector rendered competition unsustainable. A review, undertaken by the Commission led to the repeal, in 2006, of Council Regulation 4056/86 with a two-year transitional period where conferences were still allowed.
One category of agreement – relating to consortia - continues to benefit from a block exemption regulation. A block exemption for consortia first adopted in 1986 and has been renewed a number of times since. Today, Commission Regulation (EC) No 906/2009 exempts certain types of cooperation – creating a safe harbor for consortia agreements from the prohibition in Article 101(1) of the TFEU where certain conditions are met. A consortium is a type of cooperation between groups of ship owners in which the members of the consortium pool their vessels in order to provide a joint service on a route. The Consortia Block Exemption Regulation defines a consortium as an agreement between carriers, "the object of which is to bring about cooperation in the joint operation of maritime transport service, and which improves the service that would be offered individually by each of its members, [...] in order to rationalize their operations by means of technical, operational and/or commercial arrangements."
Consortia generally bring about economies of scale and better space utilization on ships. These efficiencies are presumed to be passed on to customers in terms of better services and higher coverage of ports provided there is sufficient competitive pressure on the consortium. Because of this need to ensure competitive pressure the joint market share of the members of the consortium may not exceed 30% and, where it does, it no longer benefits from the safe harbor provided for in the Regulation.
The current Consortia Block Exemption Regulation was extended in 2020 for a period of four years to 24 April 2024.
In the area of maritime transport and, in the context of the Global Regulatory Maritime Summit, the Commission has regular biennial discussions on competition and regulatory issues with, the United States' Federal Maritime Commission and the Ministry of Transport of the People’s Republic of China, in particular in view of the global nature of the liner shipping market.
For further information - see Key Cases and Judgements
The application of State aid rules to maritime transport aims on the one hand at ensuring a level-playing field within the EU and on the other hand at preserving the competitiveness of the European maritime industry vis à vis third countries. State aid to maritime transport may be granted if it fulfils the conditions laid down in the EU Guidelines on State aid to maritime transport (“the Maritime Guidelines”).
The objective of these Guidelines is to provide incentives to encourage ship registration in the EU, help the EU shipping industry to remain competitive on the global market and preserve EU employment, improve maritime know-how and promote high environmental standards. To that end, the Maritime Guidelines allow for certain types of tax reliefs for shipping companies. The most important measures are the so-called tonnage tax schemes and seafarer schemes. Tonnage tax schemes replace the normal corporate tax by a tax linked directly to a notional profit based on ship tonnage operated. Seafarer schemes are tax reliefs for shipping companies (and sometimes for seafarers) for income tax and social security contributions.
The Maritime Guidelines entered into force in 2004. In the first half of 2012, the Commission consulted the public on their application and on whether they should be revised. Taking into account that consultation, it was considered that a revision of the Maritime Guidelines was not required.
In order to ensure a consistent application of the Maritime Guidelines, the Commission follows a series of harmonized standards. For instance, the Commission has provided clarifications as regards the activities that are eligible and ineligible for support under the Maritime Guidelines, and under what conditions. The Commission has adopted a number of decisions in this sector, reinforcing its decision-making practice. These cases concerned the setting up of new schemes, prolongations as well as extensions of existing schemes.