Block exemption for certain liner shipping agreements renewed from 1 January 2025 to 31 December 2029

11 November 2024

The Competition (Block Exemption for Liner Shipping Agreements) Order (“BEO”) in respect of vessel sharing agreements (“VSAs”) for liner shipping services and price discussion agreements (“PDAs”) for feeder services will be renewed from 1 January 2025 to 31 December 2029. This follows the Competition and Consumer Commission of Singapore’s (“CCCS”) recommendation to the Deputy Prime Minister and Minister for Trade and Industry to renew the BEO for a five-year period. The relevant provisions in the Competition (Block Exemption for Liner Shipping Agreements) (Amendment) Order 2024 (“Amendment Order”) came into force on 28 October 2024 to amend the BEO to give legislative effect to the renewal.

Section 36 of the Competition Act 2004 (“Act”) empowers the Minister for Trade and Industry to make a block exemption order, following CCCS’s recommendation, to exempt certain categories of agreements from section 34 of the Act which prohibits anti-competitive agreements. A block exemption is granted on the basis that a category of agreements fulfils the net economic benefit (“NEB”) criteria set out in section 41 of the Act. A block exemption order is granted to agreements which contribute to improving production or distribution, or promoting technical or economic progress, without imposing undue restrictions, or possibly eliminating competition in respect of a substantial part of the goods or services in question.

The BEO is currently the only block exemption order in force. The BEO was first put in place in 2006 and subsequently renewed in 2010, 2015, 2020, and 2021. In 2021, the BEO was renewed from 1 January 2022 to 31 December 2024.

Net economic benefit of VSAs and PDAs

In recommending extending the BEO for VSAs and PDAs, CCCS has assessed these categories of liner shipping agreements (“LSAs”) to generate NEB for Singapore as follows:

  • VSAs will improve the global connectivity of Singapore’s port and support Singapore’s status as a transhipment hub. VSAs also enhance competition among liners by lowering barriers to entry for smaller liners to provide services on trade routes and at frequencies that they would otherwise not be able to provide on their own due to lack of scale. Further, VSAs bring about environmental benefits by enabling liners to share, utilise, and deploy larger vessels that are more environmentally friendly.
  • PDAs remain relevant for some feeders operating in Singapore. Being able to participate in such PDAs attracts feeders to base their headquarters and operations in Singapore and connect their services through Singapore. Feeders, in turn, attract and anchor main lines to Singapore, thus expanding Singapore’s shipping network to support its transhipment hub. Anti-competitive effects from the use of such agreements appear to be limited.

Scope of BEO updated

The scope of the BEO will be updated to cover co-operation among liners specifically for the transport of goods between ports only. CCCS will consider appropriate regulatory measures should co-operation on inland carriage of goods become prevalent in the future and prove beneficial for Singapore. These measures aim to facilitate co-operation while ensuring a level playing field for all relevant providers (including freight forwarders).

To facilitate the transition, CCCS recommends a provision in the BEO to allow any current LSAs involving inland carriage of goods to benefit from the BEO for one year (i.e. 1 January 2025 to 31 December 2025). The relevant provisions in the Amendment Order shall come into effect on 1 January 2025 to give legislative effect to the transition.

Public consultation

By way of background, from 27 May 2024 to 17 June 2024, CCCS conducted a public consultation to seek feedback on its proposed recommendation to renew the BEO from 1 January 2025 to 31 December 2029. CCCS also sought feedback on the current and impending usage of LSAs which involve inland carriage of goods (e.g. truck or rail haulage) occurring as part of through transport.

Reference materials

The following materials are available on the CCCS website www.cccs.gov.sg and Singapore Statutes Online sso.agc.gov.sg: