European Commission sets up rules for more competition in ship classification market by making IACS’ commitments
On 14 October 2009 the European Commission ended its antitrust case against IACS (International Association of Classification Societies) by adopting a decision that renders legally binding commitments offered by IACS to address Commission concerns that IACS may have infringed European competition law (article 81 of the EC Treaty) prohibiting restrictive business practices.
The European competition regulators carried out announced inspections in the ship classification market in January 2008 and came to the preliminary view that IACS may have reduced the level of competition in the ship classification market, notably by preventing classification societies which are not already members of IACS from joining IACS and from participating in its technical working groups and from access to technical backgrounds documents. Since IACS’ rules –which are developed by the working groups- do apply to more than 90 percent of the world’s cargo carrying tonnage, these practises were seen as barriers to the entry and the development of new classification societies in the shipping market.
In order to address the Commission’s concerns, IACS committed to “set up objective and transparent criteria and to apply them in a uniform and non-discriminatory manner”, “to ensure that classification societies which are not members of IACS will nonetheless be able to participate in IACS’ technical working groups”, to make all current and future resolutions and their related technical background documents public and to set up an independent appeal board to settle possible disputes (Commission’s press release IP/09/1513).
According to Article 9 of the Regulation 1/2003 the Commission decided to end up the case by adopting a commitment decision. This means that IACS does not admit any illegal behaviour and pays no fine. Nevertheless the commitments are now legally binding and the Commission could levy a penalty of up to 10 percent of a company’s global turnover if the ship classifier fails to comply with the commitments made.
Competition Commissioner Neelie Kroes commented: “This decision opens up the ship classification market to the benefit of both classification societies which are not members of IACS and customers of ship classification services. This paves the way for more competition in this market, which should generate lower prices, more customer choice and improved quality of services.”
Chairman of AICS Hermann Klein said: “The closure of the Commissions investigation without finding any possible infringement of competition law by IACS and its members is an excellent outcome for the maritime industry. The reputation of classification societies as independent third party organisations respecting law and order has been reinforced.”