Shipping giants to be prosecuted for alleged price fixing in South Africa

Eight cargo shipping companies have been referred to the Competition Tribunal for allegedly fixing rates for the transportation of goods between Durban and several Asian cities between 2008 and 2018.

These shipping companies include Maersk, Mediterranean Shipping Company (MSC), CMA CGM, Pacific International Lines, Mitsui, Evergreen, COSCO, and K Line Shipping.

The Competition Commission states that these shipping liners are alleged to have been involved in fixing rates, known as General Rate Increases (GRIs), over a decade-long period.

These rates are charged to customers for the shipment of general cargo en route from South Africa to Asia and back, as well as to and from South Africa and West Africa.

“The Commission’s investigation found that the respondents charged the same GRI for the routes from Shanghai, Ningbo and Shekou to Durban, from Durban to Hong Kong, and from Qingdao to Durban,” the Commission said.

According to the Commission, this constitutes price fixing as it contravenes section 4(1)(b)(i) of the Competition Act.

This prohibits agreements between competing firms, known as a horizontal relationship, that directly or indirectly fix the purchase or selling price of a good or any other trading condition.

“The dismantling of the cartel will reduce the price of goods imported to South Africa for the benefit of consumers and will also reduce the costs of exports out of South Africa,” said Commissioner Doris Tshepe.

“This will, in turn, render South African exports competitive in the world markets.”

According to Maritime Studies South Africa, all the companies to be prosecuted fall within the top ten currently operating in the country.

MSC is currently considered the largest shipping company in the world, with roughly 900 ships and a Twenty-foot Equivalent Unit (TEU) capacity of 6.47 million.

TEU measures the combined capacity of a fleet, given that the average container size is 20 feet long.

Maersk is ranked second with 736 ships and a TEU capacity of 4.56 million, while CMA CGM is third with a fleet of 667 vessels and a TEU capacity of 3.89 million.