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Japan – Shipping Cartel Sanctioned By Fair Trade Commission.

20 August, 2014

 

Legal News & Analysis – Asia Pacific – Japan – Competition & Antitrust

 

On 18 March 2014, the Japan Fair Trade Commission (“JFTC”) issued cease and desist orders and fines totalling JPY 22.7bn (SGD 280m) against four shipping companies – namely, Nippon Yusen Kabushiki Kaisha (“NYK”); Kawasaki Kisen Kaisha, Ltd. (“K Line”); Wallenius Wilhelmsen Logistics, AS (“WWL”); and Nissan Motor Car Carrier Co. Ltd. (“NMCC”), for operating a cartel in the automotive shipping industry. A fifth participant, Mitsui OSK Lines, Ltd. (“Mitsui”), benefited from the JFTC’s leniency program and received immunity from the sanctions.


The JFTC found that the cartel operated across four global shipping routes – the North American route; the European route; the Middle and Near Eastern route; and the Oceania route – between at least mid-January 2008 until 6 September 2012, when the JFTC conducted dawn raids on a number of the companies, in coordination with investigations by the European Commission and the US Department of Justice’s Antitrust Division in their respective jurisdictions.


All five parties were found to have engaged in price fixing and bid rigging in respect of international ocean shipping services for automobiles, by agreeing to prevent freight rates from falling and to refrain from competing against one another on various shipping routes. NYK, K Line and Mitsui were found to have participated in the cartel across all four shipping routes; WWL was involved in respect of the North American and European routes; and NMCC only took part on the European route.


In addition to the fines, the four companies received cease and desist orders requiring them to immediately terminate their anti-competitive agreements and refrain from engaging in similar conduct in future. The orders also oblige each company to inform its employees, and customers and the other cartel participants of the measures adopted in this respect, as well as to educate employees on competition law compliance.


As a result of the investigation, the JFTC has also made a request to the Ministry of Land, Infrastructure, Transport and Tourism (“MLIT”) to abolish the statutory antitrust exemption for agreements between shipping companies on freight rates and ship arrangements. Currently, these agreements may, upon notification to the MLIT, be exempted from the application of the provisions of the Japanese Anti-Monopoly Act.


In Singapore


Currently, the Competition (Block Exemption for Liner Shipping Agreements) Order 2006, exempts a category of liner shipping agreements from the application of section 34 of the Singapore Competition Act (Cap. 50B), which prohibits agreements between undertakings which have as their object or effect the prevention, restriction or distortion of competition within Singapore. The Block Exemption Order is in force until 31 December 2015 and its continued application is subject to an on-going study being conducted by the Competition Commission of Singapore.

 

Drew & Napier

 

For further information, please contact:

 

Cavinder Bull, Director, Drew & Napier

cavinder.bull@drewnapier.com

 

Chong Kin Lim, Director, Drew & Napier

chongkin.lim@drewnapier.com

 

Scott Clements, Drew & Napier

scott.clements@drewnapier.com

 

Homegrown Competition & Antitrust Law Firms in Japan

 

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