December 03, 2008

Indian shipping lines end cartel to fix tariff

ET reported that merchandise exporters would soon find their logistics costs coming down significantly as shipping companies that handle most of the consignments from India have agreed to discontinue their dialogue among themselves to fix tariff. The move comes after the commerce ministry and Competition Commission of India stepped up pressure on the companies to end their alleged cartelization.

As per report, the shipping companies would no longer hold meetings to discuss tariff. Instead of conferences, ship owners would set up a consortium like the star alliance in the airline industry. The CCI told the ship owners that approval to such a consortium could only be given after examining the content of its charter.

Under the competition law, 4 types of agreements among companies operating in the same business are considered anti competitive. Agreements to fix prices, rig bids, control production and to share markets attract penal provisions in the competition law. Deals such as airlines deciding to operate only 3 flights between Mumbai and Delhi when competition would have brought in more or sharing different markets by different players by understanding among them would come under this definition.

Shipping Corporation of India is a major participant in the 15 member combine of ship owners offering services to exporters from South Asia and other regions under the umbrella of India Pakistan Bangladesh Ceylon Conference. Others include France’s CMA CGM, Germany’s Hamburg Sud and Hapag Lloyd, United Arab Shipping Company and K Line America Inc.