File under Block Exemption Order
Block Exemption Order
Section 34 of the Competition Act 2004 (the “Competition Act”) prohibits anti-competitive agreements. However, the Minister for Trade and Industry can make an order under section 36 of the Competition Act, following the recommendation of CCCS, to exempt certain categories of agreements from section 34 prohibition. This is known as a “block exemption”. A block exemption is granted on the basis that a category of agreements fulfils the net economic benefit criteria set out in section 41 of the Competition Act. An agreement generates a net economic benefit if there are significant economic benefits that outweigh the anticompetitive effects, and the restrictions on competition are necessary to achieve the economic benefits and do not substantially eliminate competition.
Competition (Block Exemption for Liner Shipping Agreements) Order
At present, the only block exemption in Singapore is the Competition (Block Exemption for Liner Shipping Agreements) Order (the “BEO”), which is valid until 31 December 2024.
The BEO exempts certain types of liner shipping agreements from the section 34 prohibition of the Competition Act, subject to certain conditions and obligations. Liner shipping agreements are agreements between two or more vessel-operating carriers which provide liner shipping services, i.e. the transport of goods on a regular basis between ports in accordance with timetables and sailing dates advertised in advance.
With effect from 1 January 2022, the following liner shipping agreements are covered under the BEO:
a. Vessel sharing agreements for liner shipping services
Vessel sharing agreements are agreements between two or more liners on operational arrangements relating to the provision of liner shipping services, including the coordination or joint operation of vessel services, and the exchange or charter of vessel space, and which do not include any discussion or agreement on prices or remuneration terms to third parties
b. Price discussion agreements for feeder services
Price discussion agreements are agreements between two or more liners which discuss commercial arrangements relating to the provision of liner shipping services, including prices and remuneration terms to third parties. Only price discussion agreements for the provision of feeder services fall under the scope of the BEO. Feeder services are liner shipping services provided to main lines on regional trade routes between Singapore and ports that the main lines may not serve (e.g. main lines operate larger vessels that may not be able to call at smaller ports).
For further information on the conditions and obligations to be an exempted liner shipping agreement and other information, please refer to the Competition (Block Exemption for Liner Shipping Agreements) Order, which is to be read together with the accompanying Guidance Note on the BEO.
Parties who are not sure if their agreements fall within the BEO may wish to seek legal advice.
File an agreement under the BEO
Only parties to liner shipping agreements with an aggregate market share of above 50% are required to file their agreements to CCCS. Where any variation or amendment is made to a liner shipping agreement that has previously been filed with CCCS, such variation or amendment together with the varied or amended agreement is to be filed with CCCS, upon CCCS’s request.
The filing and notification procedures are specified in Annex I of the Guidance Note on the BEO.