The Competition Commission of Singapore (CCS) has given the nod to the proposed joint venture between Japan’s big three lines – Kawasaki Kisen Kaisha (K Line), Mitsui OSK Lines (MOL) and Nippon Yusen Kaisha (NYK).
K Line, MOL and NYK applied for a decision by CCS on whether the creation of their container shipping joint venture would infringe the prohibition in the Competition Act against anti-competitive mergers.
“In examining the impact of the joint venture on the global supply of container liner shipping services for intra-Asia trade routes, and for trades involving the East Asia region (which includes Singapore), as both origin and destination with various other regions around the world such as Europe and North America, CCS conducted a public consultation and sought feedback from vessel operating common carriers, non-vessel operating common carriers, and beneficial cargo owners,” CCS stated.
“After reviewing the parties’ submissions and the feedback received, CCS concluded that the creation of the joint venture, if carried into effect, will not infringe the prohibition in the Act against anti-competitive mergers,” it said.
On 31 October 2016, the three Japanese lines announced an integration of their container shipping business with a joint venture planned to be established by 1 July 2017 and the start of operations from 1 April 2018.
The decision to integrate came on the back of low oil prices, sluggish cargo demand, oversupply of trade capacity, and container freight rates at historic lows.
In giving the green light to the joint venture, CCS found that none of the parties’ combined market shares for each of their markets crosses CCS’s indicative thresholds of a merger situation that may raise competition concerns.
“The joint venture is unlikely to increase the possibility of anti-competitive coordination given the large number of liners and low market concentration that would continue to exist post-joint venture,” CCS said.
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