The EU Commission is delaying the extraterritorial enforcement of EU antitrust law on seaborne trade between China and the EU, according to August Braakman, former secretary-general of the European Maritime Law Organisation, writing for Splash247. Braakman argues that geopolitical, economic, and legal considerations are behind the Commission's reluctance, but warns that the law demands absolute compliance and that failure to apply it has severe consequences.
The Commission's Reluctance
Braakman outlines three main reasons the EU Commission abstains from voluntary extraterritorial implementation of EU antitrust law on China-EU seaborne trade:
- Geopolitical: Implementation is independent of and contrary to global power politics.
- Economic: Implementation distorts supply of China-origin primary and secondary necessities of life to the EU.
- Legal: Implementation obviates mandatory simultaneous and equal pursuit of EU law on climate change.
Despite these concerns, Braakman insists that "the law is the law" and requires absolute compliance from the EU Commission.
The Legal Framework
The European Court of Justice has held that EU antitrust law applies to areas outside the geographic scope of the Union when anti-competitive conduct of entities that are neither EU nationals nor physically present in the EU produces immediate, substantial, and foreseeable effects on patterns of trade between Member States. The location of the conduct is irrelevant; it is the object or effect that matters. Furthermore, even if the conduct is permitted by foreign jurisdictions, EU antitrust law prevails if it has the object of infringing EU law.
The Role of Singapore and Shipping Alliances
Singapore is by far the most important port-of-call for intra-Asia trade and for mega-carriers cooperating within an alliance. These alliances use Singapore to unload cargo destined for Asia and continue their route with cargo bound for the EU. On the intra-Asia leg, cooperation between shipping lines is allowed under the block exemption of Singapore Competition Law, which permits arrangement on technical, operational, or commercial issues, price, and remuneration terms.
However, shipping alliances organize China-EU seaborne trade through rigorous coordination of decision-making in the logistics chain, requiring exchange of strategically sensitive information. Braakman argues this exchange must be assessed under EU antitrust law. Parameters for assessment include:
- The subject matter of the information exchanged
- The objective of the exchange
- The economic and legal context
- The nature of the goods or services affected
- The real conditions of the functioning and structure of the market(s) in question
Such coordination covers the entire route. It must be assessed whether coordination on the intra-Asia leg prevents alliance members from maintaining a separate identity, having separate sales, pricing, and marketing functions, and having the sole object of promoting competition on the EU leg.
Call for Legal Action
Braakman argues that parties involved in China-EU seaborne trade should take legal action to protect their legitimate interests. The article does not specify which parties or what form of action, but emphasizes that the EU Commission's refusal to apply EU antitrust law has severe legal consequences.
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