Antitrust raids on shipping container firms grab food sector’s attention

By Rory Harrington

- Last updated on GMT

Related tags: European union, European commission

A host of major food companies will be among those eagerly watching developments after antitrust officials from the European Commission raided a number of container liner shipping firms over suspicions that competition rules had been breached.

Shipping containers form a vital link in the supply chain for food brand owners and retail outfits. Custom from the UK sector alone is estimated to run into hundreds of millions of pounds a year, said the UK Freight Transport Association (FTA).

Antitrust suspicions

Brussels confirmed last week the unannounced searches were carried out on May 17 at companies active in the container liner shipping in several Member States.

“The Commission has reason to believe that the companies concerned may have violated the antitrust rules that prohibit cartels and restrictive business practices and/or abuse of a dominant market position,”​ said a statement from the EC.

Although the Commission declined to name the firms under investigation, A.P. Moeller-Maersk of Denmark, CMA CGM of France and Hapag-Lloyd of Germany, all confirmed to Bloomberg News they were part of the investigation and were cooperating with officials.

The EC added that inspections were a preliminary step into suspected anticompetitive practices and that there was no assumption of guilt on the part of the firms visited.

Interest from food industry players

The UK’s FTA, a trade body representing the transport interests of companies moving goods by road, rail, sea and air, said its members had been expressing unease that “shipping companies appeared to be acting in a lock step fashion”​ during 2009/10.

These concerns included roll overs- where cargo was kept in ports and shipping companies attempted to renegotiate fees for their transportation. Disquiet over slow steaming practices – with cargoes carried less quickly to cut fuel costs for shipping lines, was also cited.

The group, whose members include food companies such as Nestle, Kellogg, Tate and Lyle and Kraft, as well as retail players such as Tesco, Asda and Sainsbury, said it had been keeping a close eye on container liner shipping companies since the EC withdrew the sector’s block exemption from some European competition rules in 2008.

Chris Welsh, FTA general manager global and European policy, told FoodProductionDaily.com: “The amount the food sector spends on container freight shipping is quite considerable and companies will clearly be interested in knowing if there was anything going on.”

But Welsh stressed the inquiry was at a “very early stage”​ and there was no evidence at this stage that antitrust laws had been broken.

Investigations of this nature can take years to resolve. If freight line shipping companies were eventually found guilty, food industry players could seek compensation through legal action if they could demonstrate they were affected.

However, it was not unusual for parties to reach a private ‘out-of-court” settlement that often involved a confidentially clause, said Welsh.

Related topics: Regulation & Safety

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