What is the Consortia Block Exemption Regulation (‘CBER')?
The Consortia Block Exemption Regulation (CBER) was first adopted by the European Commission in 2009 and extended in 2014 and 2020.
The CBER acted as a framework that allowed carriers (shipping lines) to cooperate under operational agreements such as vessel-sharing agreements for provision of joint cargo transport services without having to do a specific competition law assessment provided certain conditions were met.
What is happening?
On 10 October 2023, the European Commission announced that it will not be extending the Consortia Block Exemption Regulation (CBER) beyond April 2024.
With this decision, operational agreements serving European trades will now fall under the EC’s general competition rules instead of a simplified framework.
Why is this important to International Traders
The information relates to the topic of “consortia” and joint operation of services for shipping containers which was a major problem for the shipping industry particularly during the period 2020 to 2023 and led to astronomical freight rates and extensive capacity issues during the post-Brexit transition and the pandemic period.
As this exemption has now been lifted in Europe as it was no longer seen as fit for purpose, it seems that shipping lines are fearing the same decision might be taken in the UK when the CMA (UK’s Competition and Markets Authority) finalises its review of the UKs equivalent block exemption regime for the liner shipping industry when it expires in April next year.
In the recent past, the UK’s main trade association for freight forwarding and logistics companies (BIFA) has said that its members are extremely concerned that practices undertaken by container shipping lines, as well as easements and exemptions provided to them, have been distorting the operations of the free market to the detriment of international trade.
This has been a problem for many years due to the consortia arrangements and meant that terms like price fixing and cartels were often whispered amongst industry experts when discussing dealings and the way that the liner shipping industry operated.
The fact that the CBER in Europe has now been rescinded points in favour of a possible new dawn in relation to supply chains and shipping line trade especially if the UK CMA follows suit and allows their block exemption to expire also.
Any questions or queries around this matter, please don’t hesitate to contact MGC Import Export Consultants for a further discussion.