CCI asks shipping ministry to curb cartelisation

Irked at shipping lines forming cartels to fix freight rates and other charges, the Competition Commission of India (CCI) has asked the Shipping Ministry to take steps to curb such practices to safeguard the interests of Indian exporters.

"India's new competition law, the Competition Act, 2002, provides for no exemption for shipping conferences. It regards cartels as a very serious violation and (such a practice) is presumed to be anti-competitive," CCI Member Vinod Dhall told here.

In a letter to the Shipping Ministry, the CCI pointed out that the India-Pakistan-Bangladesh-Ceylon Conference (IPBCC), which is one of the oldest shipping conferences in the world, controls about 75 per cent of the traffic between India and Europe.

The IPBCC fixes freight rates and other charges like terminal handling charge (THC), bunker adjustment factor (BAF), and currency adjustment factor (CAF), which is followed by its members, and also becomes a standard for non-members.

Dhall said that since 95 per cent of India's international trade by volume and 70 per cent by value was through the sea route, this impact of cartel-type activity by IPBCC on the competitiveness of Indian exports can be substantial. It also increased the cost of imports, he added.

He gave a warning to shipping lines by saying that the penalties for cartels were particularly severe under the Indian law.