A decision by the European Commission not to extend the validity of the Consortia Block Exemption Regulation (CBER), which is due to end in April 2025, has been welcomed by the International Federation of Freight Forwarders Associations (Fiata).
Established in 2009, the CBER allowed liner shipping operators with a combined market share below 30%, to cooperate and provide joint transport services. This was to create efficiencies that were intended to benefit other supply chain stakeholders and consumers.
However, feedback received by Fiata showed that freight forwarders had not benefited from anticipated service efficiencies, and consumers had not received significant cost savings. Concerns were raised regarding the heightened risk of unfair market conditions under the CBER, which Fiata had previously stated was no longer fit for purpose in the evolved situation of market concentration and vertical integration.
Notably, Fiata considered that the CBER, aimed at optimising port-to-port services, did not accommodate the market evolution towards vertical integration by ocean carriers to also encompass hinterland transport. In addition, the effects of alliances and consortia did not seem to be sufficiently considered under traditional market concentration indicators applied to the container shipping sector requiring a new approach.
Given the importance of the CBER and the risks posed to market competition conditions, in July 2022, Fiata, along with nine trade organisations, proactively sought reform of the CBER. Clecat – the European Association for Forwarding, Transport, Logistics and Customs Services - provided evidence that the CBER no longer fulfilled the criteria of effectiveness.
Fiata had consistently called for due consideration to be given to the past few years, irrespective of the pandemic and strained circumstances, as it exposed the weaknesses in the supply chain. It also emphasised the effects of profits generated during this period in fuelling vertical integration and provided extensive evidence gathered by its dedicated Global Maritime Taskforce, on the unfair practices this integration has produced.
The Commission took a year to deliberate on its announcement after the review process held between August and October 2022 concluded.
“Forwarders play a significant market role and are also users of the transport system wherein they are in direct competition with carriers acting as their service providers. Fiata welcomes the Commission’s recognition of forwarders as important supply chain stakeholders,” said Dr Stephane Graber, Fiata director general.
“Fiata acknowledges that the expiry of the CBER does not mean that consortia are prohibited in the EU. It appreciates that any possible consortia in the future will be subject to strengthened supervision based on the EU antitrust rules that apply to all other economic sectors. This will enable the Commission to take into account the new normal in the market, accounting for the vertical integration of certain carriers and heterogeneity in the size of other stakeholders and carriers.”
