Ocean liner shipping class exemption

Summary

The ACCC has issued a discussion paper seeking comments on a possible class exemption for ocean carriers providing international liner cargo shipping services to and from Australia (Liners).

Liners currently have access to a wide suite of exemptions from Australia’s competition law. These exemptions are set out in Part X of the Competition and Consumer Act 2010 (Cth) (the CCA).

However, the 2015 Competition Policy Review (the Harper Review) recommended that Part X be repealed and that the ACCC develop a class exemption for liner shipping agreements that meet a minimum standard of pro-competitive features.

The ACCC is proposing to develop such a class exemption, that would provide legal protection for certain types of coordination among Liners and their customers without them having to apply to the ACCC.

A class exemption is a way for the ACCC to grant businesses an exemption from competition law for certain ‘classes of conduct’ that may otherwise carry a risk of breaching competition laws, but:

  • do not substantially lessen competition, and/or
  • are likely to result in overall public benefits.

Should the Australian Government decide to repeal Part X, coordination among Liners may breach competition laws. A class exemption would provide a ‘safe harbour’ for eligible businesses to coordinate without breaching the competition law. It would operate alongside the ACCC’s existing ‘authorisation’ and ‘notification’ processes, which a business that falls outside the class exemption could still use to seek legal protection on a case-by-case basis.

Next steps

The ACCC’s work on a potential liner shipping class exemption has been affected by issues relating to the ACCC’s earlier collective bargaining class exemption. The legislative instrument to establish that class exemption was introduced late last year, and a liner shipping class exemption would ultimately follow the same process. However, the collective bargaining class exemption has, until last week, been subject to a ‘motion to disallow’ issued by the Senate Standing Committee for the Scrutiny of Delegated Legislation. The minutes for the meeting withdrawing the motion to disallow are here (see item 5).

As we understand it, the Senate Committee’s concerns were not specific to that instrument but are matters of principle and would likely apply to other ACCC class exemptions. Accordingly, the Committee’s views are highly relevant to the ACCC’s proposed Liner Shipping Class Exemption and whether it proceeds. The ACCC is exploring whether a possible liner shipping class exemption, on the terms we were considering, would also be likely to result in a motion to disallow and will provide an update once that issue has been explored.