Canada’s Competition Bureau has joined the competition authorities of the United States, Australia, New Zealand, and the United Kingdom in a new working group focused on sharing information to identify and prevent potentially anti-competitive conduct in the global supply and distribution of goods.
The working group brings together the bureau, the U.S. Department of Justice, the Australian Competition and Consumer Commission (ACCC), the New Zealand Commerce Commission and the U.K. Competition and Markets Authority.
In light of pandemic-related disruptions to global markets, the five competition authorities will share information on potentially anti-competitive conduct affecting global and domestic supply chains. The purpose of the working group is to help identify attempts by businesses to use supply chain disruptions as a cover for price-fixing or other collusive activities that involve competitors cooperating instead of competing with each other.
Shippers warn carriers
“This is a timely and welcome announcement that competition authorities around the world share shippers’ anxieties about how markets are behaving,” said James Hookham, executive director of the Global Shippers’ Forum (GSF). “Carriers should consider it a ‘verbal warning’ over how rates and capacity are expected to behave as the global economy emerges from the pandemic.”
The Canadian Freight Management Association (FMA), which is part of the GSF, issued a strong statement, saying carriers have made “obscene profit” thanks to a non-competitive market. The FMA said it is pleased that the five countries have formed the working group.
“Over the past two years ocean carriers have cut service and raised rates,” said John Corey, FMA’s president.
“Rates have tripled on some routes, contract rates are not being honoured, containers are in short supply, sailings cancelled, container lines are sending empty containers back to Asia resulting in short-changing Canadian exporters of containers. In the meantime ocean carriers have made over $200 billion in profit in the past two years.”
Julia Kueljevich, CIFFA’s communications manager, said this is “positive news in terms of more and better opportunities in supply chain for collaborative identification and sharing of potentially anti-competitive conduct.”
The UK’s main trade association for freight forwarding and logistics companies, British International Freight Association (BIFA), says its members are extremely concerned that practices undertaken by container shipping lines, as well as easements and exemptions provided to them under competition law, are distorting the operations of the free market to the detriment of international trade.
In particular BIFA members have voiced their concerns about having their contract rates cancelled by container shipping lines forcing them onto the more expensive spot market. Limiting access to the market is causing the members considerable concern.
“We are convinced that the well-documented chaos within the container shipping sector is leading to commercial power becoming increasingly concentrated, resulting in diminished market choice and competition, and distorted market conditions. It will be interesting to see if the five competition authorities find that the current supply chain disruptions are a direct result of anti-competitive conduct,” said BIFA director general, Robert Keen.“BIFA members fully accept that a free market economy is open to all, but are increasingly concerned that the activities of the shipping lines, and the exemptions from legislation from which they benefit, are adversely and unfairly affecting their customers, especially freight forwarders and SME businesses.”
Canada’s Competition Bureau will work closely with its international counterparts and says it not hesitate to take action against any conduct in violation of Canada’s Competition Act.
“While the Competition Bureau has offered businesses flexibility in contributing to legitimate pandemic response efforts that benefit Canadians, we want to be clear: we have zero tolerance for any attempts to use pandemic-related supply chain disruptions as a cover for criminal collusion that harms consumers and damages Canada’s economy,” said Matthew Boswell,
commissioner of competition.
During the pandemic, the Competition Bureau recognized the need for temporary collaborations such as collaborative buying groups or sharing supply chain resources such as distribution facilities. “In such circumstances, where firms are acting in good faith, and motivated by a desire to contribute to the crisis response rather than achieve competitive advantage, the Bureau does not wish to see specific elements of competition law enforcement potentially chill what may be required to help Canadians,” it said in a 2020 statement.
The bureau offered informal consultation services to companies seeking guidance on their pandemic collaborations.