The Competition Act 1998 prohibits agreements between undertakings which restrict competition in the UK (unless they qualify for exemption under section 9(1) of the Competition Act or they are not otherwise excluded). This is called the Chapter I ban.
An agreement is exempt from the Chapter I prohibition if it creates efficiencies and benefits sufficient to outweigh any anti-competitive effects. A “block exemption” regulation automatically exempts agreements of a certain category from the Chapter I prohibition if the agreement meets the conditions set out in the regulation. Thus, a ‘block exemption’ offers legal certainty to businesses.
Following the UK’s exit from the EU, the EU block exemption regulations that were in force under EU law at the end of the transition period on 31 December 2020 have been retained in British law. For more details on what the retained block exemptions cover, see Guidance on CMA functions after the end of the transition period (paragraphs 4.31 to 4.36).
The retained Block Exemption Regulation (CBER) for liner shipping consortia, which expires April 25, 2024, provides an automatic exemption for certain agreements between liner shipping companies, allowing them to cooperate and provide common services through ‘consortia’. This includes joint operation of liner shipping services, capacity adjustments in response to fluctuations in supply and demand, joint operation or use of port terminals and certain other ancillary activities. CBER does not allow liner shipping companies to agree to fix prices, otherwise limit capacity or sales, or allocate markets or customers.
CMA review of successful CBER
The CMA’s review will assess whether the retained CBER serves its purpose in order to make a recommendation to the government on whether to replace or modify it when it expires. As part of its review, the CMA will take into account the specific characteristics of the UK economy serving the interests of UK businesses and consumers. He will also examine the possible implications for the retained CBER of recent developments in the liner shipping industry, including the impact of global supply chain challenges.
The European Commission announced on August 9, 2022 that it is carrying out a review of EU CBER. It had previously decided, in 2020, to maintain the block exemption until April 2024. At that time, the European Commission concluded that the block exemption remained fit for purpose and led to efficiency gains for carriers, lower prices and better quality of service for consumers. .
What the CMA plans to do and when
The CMA will provide further information on this web page in due course regarding the CBER review process retained. The CMA expects to conduct consultations on its proposed recommendation in 2023 and that the review process will be similar to that of previously considered retained block exemptions.
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Under the Competition Act 1998, the CMA’s role is to advise the Secretary of State for Business, Energy and Industrial Strategy on amending or revoking retained block exemption regulations, or on their replacement by UK law when they expire.
The CMA recently conducted reviews of the Retained Vertical Block Exemption Regulation, Retained Horizontal Block Exemption Regulation, and Retained Motor Vehicle Block Exemption Regulation.
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