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WFW Competition Alert - EU Competition Law (Cruise lines consider competition implications of aligning itineraries)
7 March 2008
| Cruise lines to confront port access issues via cooperation |
On 26 February 2008, the European Cruise Council held its annual conference in Brussels. Growing congestion in European ports was a hot topic. An increase in the number of cruises wishing to include Mediterranean ports on their itineraries is putting a real strain on existing infrastructure. With expansion not always practical due to the location of the ports, the cruise industry is considering how to address the problem of over-crowding. With some ports already refusing entry to cruise companies, the concern is that if the cruise industry does not take steps to resolve the problem, the ports will do it for them. During the conference, one possibility that was raised was the idea of information exchanges between the cruise lines, through a central “manager”, concerning itineraries. The aim would be to seek to achieve alignment of itineraries to enable the staggering of excursions and calls to individual ports. Michael Thamm, President of Aida Cruises, raised the very real concern, however, that competition law affects the extent to which the cruise companies can discuss such co-ordination.
Whilst it is generally true that competitors should not jointly co-ordinate their activities, or engage in discussions which would enable them to do so, the competition authorities have been tolerant of such co-ordination in the maritime trades. For example, the so-called Consortia Block Exemption (one of the last of its kind and the last one still standing in the maritime sector) permits the co-ordination of timetables and ports of call between liner shipping companies who offer regular, scheduled, freight transport services. The European Commission has decided that, as a matter of policy, the anti-competitive effects of such co-ordination are outweighed by the positive effects it generates. It is considered that it enables the liner companies to rationalise their activities and achieve economies of scale, particularly through more efficient utilisation of ports. Similar reasoning could be applied to co-ordination between cruise lines. For instance, if visits to ports are staggered, theoretically more cruises should be able to visit certain ports than would be the case if they all tried to turn up on the same day. This would help to regulate demand being placed on port infrastructure, and would benefit consumers if more cruises are able to offer stops in previously congested ports. For such a system to be permissible under EU competition law, however, a number of pot-holes must be avoided. Discussions must be limited to what is strictly necessary to achieve the efficiencies. The information exchange must be transparent and open to all - existing cruise lines and putative new entrants alike. Some care must be taken but the cruise can go on.
Lisa Todd, London
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