Shipping lines gain EC rules getout clause in Luxembourg court

Specialist industries face limitations on their special exemptions from certain competition rules following a ruling by the Court of First Instance in Luxembourg.
The ruling, which related to the shipping industry, is described as the most far-reaching in defining the scope of the exemptions governing shipping, airlines, cars, rail and inland waterways.
Lovells partner John Pheasant acted for 29 shipping lines against a European Commission (EC) legal team, headed by Scottish lawyer Richard Lyal. Pheasant had been involved since the end of the 1980s.
The court ruled that liner shipping industries will continue to be able to agree their own transport rates in ocean crossings. They can therefore still club together to form rates after concerns over whether this was fair in the light of a 1987 EC regulation governing maritime competition rules.
As reflected in the shipping competition case Arkin v Borchard Lines Ltd (The Lawyer, 28 January), there is some concern over shipping lines setting rates as this can lead to cartel building to oust unwanted competition.
Other conclusions by Luxembourg, however, drew the liner shipping industry into the regulation. In particular, rates for transporting goods across land can no longer be set by lines that club together; they will instead be enforced by individual lines.
Pheasant said it is simply a legal clarification of what is already taking place. “It doesn't change the practical position, as most operators have been changing their agreements to exclude the inland operation,” he said.
Pheasant represented 15 lines in this action, known as the TAA case, and the same lines plus one other in TACA immunity, in which it was decided that shipping lines are not immune from fines arising out of rate-setting for inland transportation.
Luxembourg also clarified the definition of a liner 'conference', a meeting of lines to discuss matters such as rates. The court ruled, under a section of the case called FEFC, involving 13 Far Eastern lines, that a conference must involve agreement by all parties on rates. This followed an attempt by carriers to establish two pre-agreed rates.
In the case of FEFC, former Brick Court Chambers barrister Nicholas Forwood QC acted for the 13 Far Eastern liner applicants until he was made a judge at the Luxembourg court. They were represented by Pheasant and Philippe Ruttley of Clyde & Co. Ruttley and Brick Court barrister Fergus Randolph acted for the Japanese Community Shipowners' Association.
In TAA, Ruttley acted for the Japanese Community Shipowners' Association. Mark Clough QC of Ashurst Morris Crisp acted for European shipping organisations supporting the EC in TAA and FEFC.
Matthew Levitt, Pheasant's senior associate in the case, said: “The implications for other industries with special exemptions is that they should be on notice that the courts will look in a rather restrictive way when interpreting the scope of these regimes.
“There have been rulings relating to other industries with competition exemptions [aviation, car, rail, and inland waterways], but yesterday's judgment is the most far-reaching in interpreting the scope and basis of those regimes.”
Kirstie Nicholson comprised the third member of Pheasant's team.
A European regulation coming into force this summer will mean that car manufacturers will no longer be able to impose restrictions on distributors, who will be able to sell a variety of models of car.