Hapag-Lloyd-UASC merger approved to form world's fifth-large
Time: 2016-11-29 13:45
THE European Commission in Brussels has given the green light for Germany-based Hapag-Lloyd to purchase United Arab Shipping Co (USAC) on the condition the Middle East shipping line withdraws from its "consortium on the trade routes between northern Europe and North America."
When completed, the merger of the two shipping lines will lead to the establishment of the world's fifth-largest container shipping line, reported Lloyd's Loading List.
European Commission officials noted that both Hapag-Lloyd and UASC were members of shipping alliances respectively.
The commission examined the potential impact of a merger between the two shipping lines on market competition on 13 trade routes. It was concerned that the merger could create networks on the northern Europe-North America trade routes handled by the alliances and consortiums that Hapag-Lloyd and UASC are separately part of. Thus the merged entity may be able to influence capacity and prices in a significant portion of the aforementioned markets, due to insufficient competition, to the detriment of consumers.
It added that there would be limited vertical links between the firms' businesses in container liner shipping services and related services provided in container terminals, inland transportation, freight forwarding and harbour towage.
But there was less concern over anti-competitive behaviour in these areas as there are a number of other service providers in those markets.
To alleviate these concerns, Hapag-Lloyd said it would end UASC's role in providing the NEU1 service, which plies the north Europe-US east coast route.
It said it would "entirely remove the additional link between Hapag-Lloyd's and UASC's consortia that the transaction would have created on the northern Europe?North America trade routes. As a result, the merged entity's position on these trade routes will be comparable to that of Hapag-Lloyd today".
In the meantime, UASC will still be part of the NEU1 network during the notice period to ensure an orderly withdrawal, with a monitoring party to make certain that no anti-competitive information is passed between the NEU1 service and the combined entity in the notice period.
When completed, the merger of the two shipping lines will lead to the establishment of the world's fifth-largest container shipping line, reported Lloyd's Loading List.
European Commission officials noted that both Hapag-Lloyd and UASC were members of shipping alliances respectively.
The commission examined the potential impact of a merger between the two shipping lines on market competition on 13 trade routes. It was concerned that the merger could create networks on the northern Europe-North America trade routes handled by the alliances and consortiums that Hapag-Lloyd and UASC are separately part of. Thus the merged entity may be able to influence capacity and prices in a significant portion of the aforementioned markets, due to insufficient competition, to the detriment of consumers.
It added that there would be limited vertical links between the firms' businesses in container liner shipping services and related services provided in container terminals, inland transportation, freight forwarding and harbour towage.
But there was less concern over anti-competitive behaviour in these areas as there are a number of other service providers in those markets.
To alleviate these concerns, Hapag-Lloyd said it would end UASC's role in providing the NEU1 service, which plies the north Europe-US east coast route.
It said it would "entirely remove the additional link between Hapag-Lloyd's and UASC's consortia that the transaction would have created on the northern Europe?North America trade routes. As a result, the merged entity's position on these trade routes will be comparable to that of Hapag-Lloyd today".
In the meantime, UASC will still be part of the NEU1 network during the notice period to ensure an orderly withdrawal, with a monitoring party to make certain that no anti-competitive information is passed between the NEU1 service and the combined entity in the notice period.
