African Regulators Investigate Maersk and CMA CGM for Price Collusion
The Common Market for Eastern and Southern Africa (COMESA) competition watchdog has joined a growing list of authorities investigating global container lines for collusion in fixing freight rates. After a year in which global carriers reported dramatic increases in profitability, regulators have increasingly begun to focus on the sudden and dramatic increase in freight rates experienced in 2021.
The COMESA Competition Commission announced that it has commenced investigations against two of the leading shipping companies servicing Africa, Maersk and CMA CGM, along with United Africa Feeder Line, for allegedly colluding in increasing the rates, a move that is against the trading bloc’s competition laws.
“The commission has observed that the shipping liners have issued price announcements which may be an infraction of the regulations,” COMESA said in an official notice of the inquiry inviting interested stakeholders to submit “representations on these allegations by April 30, 2022.”
The COMESA Competition Commission, which commenced operation in 2013 was the first regional competition authority in Africa and the second in the world, after the European Competition Authority. The Common Market for Eastern and Southern Africa comprises 21 member states served by numerous ports ranging from Tunisia to South Africa. The common market includes a combined population of 580 million people and geographically incorporates almost two-thirds of the African Continent.
The commission said that it has preliminary concerns that price announcements from the shipping liners were being made in the form of coordinated behavior or concerted practice. As such, the commission reports it will assess the extent to which the price announcements are compatible with the common market’s regulations.
The regulations prohibit all agreements which may affect trade between member states and have as their object or effect the prevention, restriction, or distortion of competition. Furthermore, the regulations prohibit agreements or arrangements between competitors that, among others, allocate customers and markets within the common market.
“We are investigating these shipping lines for price signaling, a move that if not checked could have a negative impact on consumers,” Dr. Willard Mwemba, chief executive officer of the competition council told Shipping and Logistics. He said they were exploring why the shipping lines had raised their freight charges to the same level within a short period of time.
COMESA is particularly sensitive to the impact that international companies have on their common market. As part of its 2025 strategic plans, COMESA is encouraging member states to establish their own shipping lines to be able to influence routing and transportation charges. The bloc is already undertaking a feasibility study for the establishment of a shipping line for the Indian Ocean Islands.
The investigation in Africa follows similar efforts that have been launched in the United States, Europe, and Australasia. Earlier this year competition commissions agreed to share information while the U.S. Justice Department at the instruction of the Biden Administration said it would be enforcing existing antitrust regulations on the shipping alliances. Similar to this African investigation, subcommittees from the U.S. Congress have also launched investigations into freight rates and the pricing policies of the large carriers.