In a potentially catastrophic spanner in the works, the Japanese container line merger plans under Ocean Network Express (ONE) have been rejected by the Competition Commission of South Africa.
While focus on regulatory approval normally focuses on the likes of the US and EU, the planned merger of the container line businesses of NYK, Mitsui OSK Lines (MOL), and K Line has fallen foul of the South African authorities.
In a statement the South African Competition Commission said it had rejected and prohibited the proposed intermediate merger.
The commission said it considered both the impact on the container shipping market and the impact on the adjacent car carrier market where the three companies have been found guilty of collusion in some markets, and are under prosecution in others.
“The Commission has found that the structure of the container liner shipping market is conducive to coordination based on previous collusive conduct in the container liner market in other parts of the world. The merger increases the likelihood of coordination as it creates further structural linkages in the container liner market,” it stated.
“The Commission also found that the proposed transaction creates a platform for coordination in the car carrier market which has a history of collusion involving the merging parties.
“It is the Commission’s view that the merging parties may require a formal mechanism for the further collusive conduct in the car carriers market. The joint venture provides such a mechanism.”
The commission said it saw the proposed merger would increase the scope of coordination in the liner shipping market and also the car carrier market.
It offered an overwhelmingly negative impacts of the merger, stating: “The Commission is of the view that the proposed transaction is likely to increase the scope for coordination in the container liner shipping market, while creating a platform for coordination in the car carrier market. The Commission further found that there are no efficiencies that outweigh the anti- competitive effects of this transaction and that there are also no remedies sufficient to address these effects.
“The Commission also found that there are no public interest issues that could outweigh the anti- competitive effects arising from the proposed transaction,” it concluded.
The ONE merger was aiming to be operational in April next year with headquarters in Singapore.
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