European competition officials this week were examining the offices of many of the world’s largest container shipping companies, investigating possible price fixing and market manipulation in the sector, according to the New York Times.
The European Commission (EC), the executive arm of the European Union and its antitrust body, was conducting the unannounced inspections alongside the national competition authorities at shipping offices in several European countries.
The EC was quoted in the report saying these companies might have violated the antitrust rules that prohibit cartels and restrictive business practices as well as possibly engaging in “abuse of a dominant market position.”
Amelia Torres, an EC spokeswoman, declined to elaborate on the inquiry.
Other companies being investigated include CMA CGM of France, Hapag-Lloyd of Germany and the Asian shipping lines Neptune Orient Lines, Orient Overseas, Evergreen Marine and Hanjin Shipping were also being investigated, according to Reuters.
The No. 2 container group, Mediterranean Shipping Co., which is based in Geneva and is known as M.S.C., confirmed that its Antwerp offices had been raided by European officials. It said that it was fully cooperating with the investigation.
The preliminary investigation covers the period from around 2008, according to the Danish company A.P. Moller-Maersk, which owns the world’s largest container liner. That was the year when liner shipping cartels known as “conferences” were banned in Europe.
A year later, many liners were pushed close to collapse by the global financial crisis and an ensuing decline in trade. This exposed overcapacity and led liners to scrap orders, conduct “slow steaming” — whereby ships operate at reduced speeds — or leave ships idle.
Since then, the industry has recovered, helped to a large degree by the robust Chinese economy, and in some cases profit returned to record levels in 2010 — although concerns have since resurfaced, notably surrounding high oil prices and difficult financing conditions.
The crisis and its immediate aftermath were also a period of particularly volatile freight prices for transportation to and from Europe. For example, rates for key routes from the Far East to Europe surged to about US$2,000 per standard unit in 2010 from below $500 in early 2009. Rates declined again in 2011.
Jesper Kjaedegaard, a partner with the consulting firm Mercator International in London, said it was probably this intense swing in rates over a year — and the industry’s shift from loss to strong profitability — that was being investigated. “How quickly the situation changed is astounding and may have raised eyebrows in Brussels,” he said.
Christian Kledal, head of legal affairs at A.P. Moller-Maersk, said that at least 16 officials from the commission were at its headquarters in Copenhagen and that they would remain there for a few more days with the company’s full assistance. Inspectors were checking computers and collecting any documents they deemed relevant, including minutes from meetings, he added.