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Letter to Competition Commission of India by Western India Shippers’ Association

09th May 2007

Shri K.K. Sharma
Competition Commission of India

Dear Sir,

It is really enlivening to note , from a F.E.News Report datelined New Delhi, 24 April, 2007, that the CCI is reportedly of the view that the shipping companies are forming cartels in the form of Conferences to decide the freight. A copy of the Press Report is attached here to for your ready reference. Another gratifying aspect of the said Report is that the CCI has not only addressed the Union Ministry of Shipping in this regard to take suitable preventing action; but is also impugnedly contemplating suo moto action once the Commission becomes functional.

I would like to bring to the kind attention of the CCI the following, as a matter of clarification. The shipping services for transportation of exim Cargo are provided by the shipping lines belonging either to the Conferences (of Shipping Lines) or those belonging to the non-Conference operators ? generally going under the nomenclature of various Discussion Agreements.

There is no denying the fact that there is, in actual practice, no mechanism in action to even monitor (leave alone discipline) the working of these shipping lines from the point of view of anti-competitive practices.

Nonetheless, the Shipping Conferences are traditionally governed by the UN Code of Conduct for Liner Conferences, 1973- a UN Convention to which India is also a signatory. The Code, in brief, provides various safeguards to protect the interests of the shippers; simultaneously providing the Shipping Line- Members of such Conferences the facility of common price-fixing, capacity adjustments etc.

With the fast decline in the Conference system, in India, the provisions of the UN Code is observed more in its breach than in its observance since the late 1980’s. The Government of India had gone to the extent, in late 80's, of even closing the Freight Investigation Bureau constituted in the 70's specifically to facilitate the implementation of the provisions of the UN Code.

In the absence of any International Convention to govern the working of the non-Conference Shipping Lines, advanced nations such as the EU, Australia, etc. started monitoring and disciplining Such shipping line operators under their Competition Regulations. The USA had formulated its own Shipping Act, 1984 as amended by the OSRA 1998. The USA also created a separate Commission, The Federal Maritime Commission to administer the provisions of these maritime regulations.

In recent years, the PRC has promulgated a Shipping Regulation of its own. The Indonesian Government has also enacted a suitable regulation to govern the shipping trade practices in their country. It is only, in the year 2005-06,the Ministry of Shipping have initiated action to draft a Shipping Trade Practices Act, 2006 a to govern the shipping trade in the country. The Union Ministry is reportedly finalising the Draft Bill for submission to the Parliament. As a matter of fact, a proposal was made by the CCI in conjunction with the FICCI to conduct a Workshop on the Regulatory aspects in the shipping industry in May 2006; for which (late) Lt. Cdr. Srinivasan, the then President of the WISA was invited to present a paper. Having regard to he foregoing,. It shall be appreciated if the WISA is also given an opportunity to contribute its expertise in any activity, proposals etc. germane to the protection of the shipping trade practices governing the exim trade of the country.

Assuring the CCI of our utmost co-operation and assistance.

Truly yours,
S.R.L. Narasimhan

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