Hong Kong's Competition Commission issues block exemption for VSAs

  August 11--THE Hong Kong Government has issued a block exemption order for vessel sharing agreements, otherwise known as shipping alliance, between ocean carrier which is to remain in effect until August 8, 2022.

  This comes after years of lobbying by shipowners and operators who operate locally, who warned that traffic would move en masse to Shenzhen if carriers were not spared the rigors of Hong Kong's restrictive competition ordinance.

  The Hong Kong Competition Commission issued a block exemption order under section 15 of the Competition Ordinance for vessel sharing agreements (VSA) between liner shipping companies.

  The order was issued in response to an application submitted to the commission in December 2015 from the Hong Kong Liner Shipping Association (HKLSA) covering vessel sharing agreements and voluntary discussion agreements (VDA).

  VSAs are agreements between shipping lines on selling space on each other's ships, while VDAs are agreements pursuant to which shipping lines discuss rate setting.

  The Hong Kong ordinance insists that parties to VSA do not exceed an aggregate market share 40 per cent and its activities do not involve cartel conduct and that shipping lines are free to withdraw from a VSA without penalty on giving a reasonable notice.

  The Competition Commission said it "decided not to issue a block exemption order for VDAs, which was proposed by the HKLSA, because it was not demonstrated that VDA activities meet the terms of efficiency exclusion."

  The HKLSA is comprised of 16 shipping lines and shipping agents engaged in liner shipping to or from Hong Kong, representing 90 per cent of the Hong Kong maritime container trade.

  The Competition Commission is issuing a six-month grace period, which will end February 8, 2018, for parties to any VSAs that do not benefit from the order and VDAs, allowing them to make any changes they consider necessary to their commercial arrangements.


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