Block Exemption Works for Shipping Conferences

Defense Counsel Journal, January 2004 | Go to article overview
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Block Exemption Works for Shipping Conferences


Writing in the July newsletter of the Multinational Litigation Committee, Marjorie Holmes and Paula Lennon of the Davies Arnold Cooper London office discuss an English case of importance to maritime law:

Arkin v. Borchard Lines Ltd., [2003] All E.R. (D) 173, [2003] EWHC 687 (Comm) (10 April 2003), is important as one of the first damages claims brought in a United Kingdom court for breach of Articles 81 and 82 of the Rome Treaty involving private enforcement of competition law. It was decided by the High Court of justice, Queens Bench Division, Commercial Court, and the decision is available on the Internet at http://www.bailii.org/ew/cases/EWHC/Comm/2003/687.html.

Mr. Justice Colman used the opportunity to give important guidelines as to the standard of proof for claiming damages. The case also established the application of the statutory limitation period at six years prior to the date the writ was served, as opposed to the date from which the alleged breach was said to have occurred. The proceedings were commenced six years after 18 April 1991. The claimant was therefore not entitled to rely on any conduct of the defendants occurring before that date as giving rise to a cause of action for breach of any duty.

This action was concerned with the operation of liner services on the routes between ports in the North Continent and Israel and ports on the east and west coasts of the U.K. and Israel. Liner services were provided by two liner conferences-UKISCON and CONISCON. A liner conference is defined as "a group of two or more vessel-operating carriers which provide international services for the carriage of cargo on particular routes within specified geographical limits and which has an agreement or arrangement, whatever its nature, within the framework of which they operate under uniform or common freight rates and any other agreed conditions with respect to the provision of liner services."

Arkin was managing director and owner of BCL Shipping Line Ltd. (BCL). he also owned and controlled various one-ship companies and also Multifleet Marine Ltd, a U.K. incorporated management company that operated and managed the one-ship companies. BCL went into liquidation in May 1992.

Proceedings were issued against four U.K.-based lines only. The Part 20 defendants were brought into the action in August 2001 by Borchard Lines Ltd. The costs claims of the Part 20 defendants will be considered by the court at a later date.

Article 82-Dominance

An investigation into the state of the market competition before commencement of the relevant period in April 1991 was undertaken because it was during the period from September 1990 that Mediterranean Shipping Company (MSC) penetrated the market. MSC was an independent carrier whose entry had an immediate and dramatic effect on all participants in the market. The conferences market share fell from 88 percent in September 1990 to 66 percent in July 1991, with MSC having 27 percent. BCL's market share fell from 9 to 6 percent during that period.

The conference lines argued that the conferences could not be dominant in circumstances where MSC found it so easy to enter the market, capture a significant market share and retain that share. In their opinion, the price war which was pursued by BCL and MSC against the conferences during 1991 demonstrated the inability of the conferences to "behave to an appreciable extent independently of their competitors," citing Michelin v. Commission, [1983] ECR 346.

Mr. Justice Colman considered the three major decisions on dominance by the European Court of justice-Hoffmann-La Roche v. Commission, [1979] ECR 461, concluding that that judgment did not state that very large market shares when taken alone were always irrebutably presumed to establish dominance but rather that, generally but not inevitably, a very large market share will be such strong evidence of dominance that it will not usually be outweighed by other factors unless they are unusual ones; AKZO v.

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Block Exemption Works for Shipping Conferences
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