Competition watchdog okays Japanese shipping lines’ JV

2017-03-27

Competition watchdog okays Japanese shipping lines’ JV

The Competition Commission of Singapore (CCS) has given the nod to a proposed joint venture between three Japanese shipping lines, it said yesterday.

The firms – Nippon Yusen Kabushiki Kaisha, Mitsui OSK Lines, and Kawasaki Kisen Kaisha – had sought approval on potential issues under the Competition Act.

The three companies will merge their container liner shipping business, and their container terminal services businesses outside Japan.

“The only overlapping service that would affect Singapore is the provision of container liner shipping services,” noted the CCS.

They also provide logistics services, bulk shipping, and car and liquid transport through their units, but the three firms will continue to offer these services separately from the joint venture.

The CCS had conducted a public consultation about the impact of the joint venture on the global supply of container liner shipping services for intra-Asia trade routes, and for trades involving East Asia – which includes Singapore.

It took feedback from vessel-operating common carriers, non-vessel operating common carriers as well as beneficial cargo owners.

The CCS set out several reasons for giving the deal the green light. One was that the combined market shares of the firms, across relevant markets such as Europe and North America, did not cross the CCS’ indicative thresholds.

Also, “the barriers to entering the relevant markets are not prohibitively high as potential entrants do not necessarily have to operate their own vessels to enter” those market, but could charter slots on vessels of other liners.

Barriers to expansion are also low as there is overcapacity in the industry, and container lines are able to include Singapore as a port of call without substantial cost.

The CCS also noted there was “limited product differentiation by container liner shipping service providers generally”, and the information out there did not suggest the three firms are closer competitors to each other than against other players.

The joint venture is also unlikely to increase the possibility of anti- competitive coordination, “given the large number of liners and low market concentration that would continue to exist” after the new firm is formed, said the CCS.

Source: Straits Times

Source from : International Shipping News

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