CONTACT US

Send us a message

* Please fill in the form below.
Shock for Japanese shipping lines as merger plan is rejected by US FMC

Shock for Japanese shipping lines as merger plan is rejected by US FMC

The US Federal Maritime Commission (FMC) has rejected the merger of the container businesses of K Line, MOL and NYK on “jurisdictional grounds”.

 

The matter will now be referred to the US Department of Justice (DoJ), which could delay or halt the proposed joint-venture.

 

In a statement, the FMC said: “The Shipping Act does not provide the FMC with authority to review and approve mergers. After careful consideration, the commission determined that parties to the ‘tripartite agreement’ (filed with the FMC on 24 March) were ultimately establishing a merged, new business entity and that action is among the type of agreements excluded from the FMC review.”

 

The approval of the agreement would have allowed the three Japanese shipping lines to begin sharing information and conduct joint negotiations from 8 May, ahead of the formation of a joint-venture company in April next year.

 

The proposed JV would propel the new entity to fifth in the global container line rankings, with around 1.5m teu capacity, and bring NYK a 38% stake and K Line and MOL 31% each.

 

The FMC’s decision is unexpected, as it is assumed that some soundings would have been made beforehand, and it could be a major setback for the synergy aspirations of the Japanese carriers.

 

However, in a statement to The Loadstar, Commissioner William Doyle said that the FMC’s decision to reject the Tripartite Agreement “in no way precludes the Japanese carriers from merging their container trade business units into a single standalone company”.

 

“In order to receive the benefits of a merger, one needs to first merge,” said Mr Doyle.

The DoJ could take a tough line on the proposed merger after its critical comments on the restructuring of the alliances. It voiced considerable concerns about the approval of the Ocean and THE alliances, saying the reduction from four to three vessel-sharing groupings posed a risk of “anti-competitive harm”.

 

A strongly worded letter from acting assistant attorney general Renata Hesse said: “This increase in concentration and reduction in the number of shipping alliances will likely facilitate coordination in an industry that is already prone to collusion.”

 

Its tone raised the possibility of a developing political policy dispute and power struggle between the FMC and the DoJ.

 

In February, the DoJ antitrust division raided a San Francisco meeting of the International Council of Containership Operators – commonly known as the Box Club – serving several members with subpoenas to testify as part of an antitrust investigation.

 

Having received its first regulatory approval from the Competition Commission of Singapore (CCS) in March, the Japanese shipping lines might have expected other regulatory bodies to “nod” the merger through. The FMC’s rejection is the new JV’s first big obstacle.

 

Indeed, The Loadstar understands that internal plans for the merger are already well advanced for the establishment of the JV by 1 July, although business operations are not scheduled to commence until next year.

 

A source at one of the carriers said staff were being asked to re-apply for their current jobs, but that it was still not clear how many redundancies would be required.

 

K Line, MOL and NYK collectively suffered a loss of some $700m from their liner divisions in the fiscal year ending 31 March.

 

 

Source: The Loadstar

 

OTHER NEWS

  • Maersk Cyber Attack: Will Ocean Freight Rates Increase ?
  • Maersk suffers a cyber attack causing IT systems to fail
  • Wan Hai Boosts China-Vietnam-Thailand Links
  • South Africa rejects Japanese container line merger proposal
  • ZIM must plot a course through some choppy financial waters
  • Fitch: Boxship Rates Rise, Capacity Still Key
  • Transpacific rates still under pressure but Asia-Europe space still tight
  • MSC prepares contingency plan for cargo aboard Rickmers charters
  • Imabari Launches 20,150 TEU MOL Boxship
  • Maersk Line Not Accepting Cargo to/from Qatari Ports
  • Hapag-Lloyd becomes latest carrier to bring in container booking cancellation fee
  • Middle East air freight disruption looms as Qatar is blacklisted over 'terror links'
  • Japanese liner shipping trio becomes ONE, ready for launch next spring
  • FMC Discusses Regulatory Reform Initiative and Ocean Carrier Alliances
  • China-Europe rail boom as forwarders latch on to cost advantage for customers
  • Hapag-Lloyd finally completes merger with UASC
  • APL turnaround brings significant boost to CMA CGM first-quarter results
  • Uber Freight officially parks in the marketplace, but only taking full loads
  • China Sparks World Container Traffic Boom
  • Navios Containers Eyes USD 75 Mn for Rickmers Fleet
  • Shippers squeezing margins 'pushed carriers toward bigger ships and alliances'
  • Crane Falls at Jebel Ali Port after Boxship Collision, No Fatalities
  • Nerves jangle as shippers and forwarders wait to hear who is bankrolling Yang Ming
  • Future Management of Hamburg Süd Unveiled
  • Shock for Japanese shipping lines as merger plan is rejected by US FMC
  • Yang Ming Expects 2nd Stage of Recapitalization by June
  • targets 3% growth as next-generation Triple-Es start to arrive
  • Sharp Decline in Idling Boxships
  • APL Enhances China-Indonesia Coverage
  • Yang Ming Halts Share Trading
  • Shanghai port, world's busiest, grapples with traffic congestion
  • Drewry: Bigger Ships to Continue Pressuring Freight Rates
  • Alibaba extends partnership with KN to cover cross-border B2B shipments
  • Seago Line Sees Modest Profit amid Lower Freight Rates
  • ZIM, MSC Upgrade North Europe Express Service
  • DHL Says Ocean Freight Rates Have Reached Turning Point
  • CMA CGM Strengthening EURAF 5 Services
  • OCEAN Alliance Starts Ploughing the Seas
  • Yang Ming losses continue to mount after 2016 revenue slump
  • FMC green light for 2M Alliance co-operation with HMM on transpacific
  • NYK, K Line and MOL pass first marker buoy en route to the merger