Market definition
The ACCC considered the relevant market definition to be the supply of containerised liner shipping on Australian trade routes.For the geographic scope of the market, inquiries suggested that individual trade routes were separate markets.
The ACCC noted that there appeared to be few barriers to switching between trade routes for shipping lines and considered the possibility that this would suggest a wider worldwide market on the basis of supply-side substitutability.
For the purpose of competitive analysis, geographic regions are considered to be in the same market if there is either sufficient demand-side substitution or sufficient supply-side substitution between the geographic regions.
The ACCC considered that if the transaction was unlikely to raise competition concerns with the narrower market definition, it would not raise competition concerns with the broader world-wide shipping market. Given the acquisition did not raise competition concerns with the narrower market definition, the ACCC did not consider it necessary to reach a conclusive view in relation to market definition.
Competition analysis
During the course of the ACCC's investigation, the following competition issues were considered:The level of market concentration
On a trade route basis, the ACCC found that the merged entity is unlikely to have a significant level of concentration and that for most trade routes there were a number of competing shipping lines which may be able to constrain the merged entity.
The extent of barriers to entry and expansion
The ACCC considered that while barriers to entry may be high, barriers to expansion and switching between trade routes appeared to be relatively low.
The ACCC's inquiries found examples of shipping lines expanding services or re-deploying vessels in order to increase existing capacity or to offer new services.
Likelihood of coordinated behaviour
A characteristic of the shipping industry is the exemption from anticompetitive conduct prohibitions of the shipping agreements entered into by a number of shipping lines.
For the trade routes relevant to Australia, both Hamburg Sud and FESCO are members of consortia and discussion agreements.
Inquiries indicated that the transaction was unlikely to alter the behaviour of the member shipping lines of these agreements.
Initiation
Parties