Hong Kong Competition Commission consults on the block exemption application in respect of liner shipping agreements

Hong Kong was probably one of the last of the mature markets to implement competition regulations. The big question for container liners is whether they will be granted a block exemption by the regulators. Realists amongst us may say that the granting of a block exemption to liner shipping is inevitable after Singapore extended its block exemption to 2020. Can Hong Kong afford to not follow Singapore? Be that as it may, due process must still be followed. 

The application for a block exemption was submitted by the HK Liner Shipping Association on 17 December 2015 and the Commission is now consulting on the application. According to the consultation notice issued by the Commission yesterday, the Commission is particularly interested in the following matters:

1. experiences with the use of Vessel Sharing Agreements (“VSAs”) and Voluntary Discussion Agreements (“VDAs”) in business operations in Hong Kong;

2. any specific issues or concerns arising from the use of VSAs and/or VDAs;

3. any economic efficiencies to which VSAs and/or VDAs may give rise; and

4. general market conditions, including the state of competition, in the liner shipping industry.

The Commission can do with assistance from the industry in understanding the particularities of VSA and VDAs used by the liners. However, rushing forward to offer assistance (the deadline is 24 March 2016), remember the age old adage 'everything you say can be used against you in a Court of law'. Careful consideration should be given to deciding what to say, how much to say, what documents to provide and by whom. It is clear that the Commission will not accept documents or information provided voluntarily on any condition that seeks to limit the Commission's use of the information. In the circumstances, it would be prudent to discuss your proposed submissions with your in-house Counsel or a trusted lawyer.