The European Commission (EC) has approved the proposed acquisition by German carrier Hapag-Lloyd of Middle East-based rival United Arab Shipping Company (UASC) subject to conditions, the merger set to create the world’s fifth largest container shipping company.
“The clearance is conditional on the withdrawal of UASC from a consortium on the trade routes between Northern Europe and North America, where the merged entity would have faced insufficient competitive constraint,” said the EC in a statement published November 23.
Commissioner Margrethe Vestager, in charge of competition policy, said: “European companies rely on container liner shipping services for their transatlantic shipments. It’s very important that the markets remain open. The commitments offered by Hapag-Lloyd ensure that the takeover will not lead to price increases on the routes between Northern Europe and North America.”
The EC said it examined the effects of the merger on competition in container shipping on 13 trade routes connecting Europe with the Americas, the Middle East, the Indian Subcontinent, the Far East, Australia, New Zealand, and West Africa, as well as Northern Europe with the Mediterranean.
It found that the merger would create links on the Northern Europe-North America trade routes between the consortia and alliances in which Hapag-Lloyd is a member and the NEU1 (ex-Pendulum) consortium, in which UASC is a member.
This meant the merged entity could influence capacity and prices on those markets, to the detriment of customers and consumers, said the EC.
The transaction also creates limited vertical links between the companies’ shipping services and Hapag-Lloyd’s operations relating to container terminals, inland transportation, freight forwarding, and harbor towage. But the commission said it found no competition concerns in these areas because several other service providers are active in these markets.
To address the competition issue, Hapag-Lloyd offered to withdraw UASC’s membership in the NEU1 consortium to entirely remove the additional link on the Northern Europe-North America trade routes. This move will make the merged entity’s position on these trade routes comparable to that of Hapag-Lloyd’s current presence.
“The Commission therefore concluded that the proposed transaction, as modified by the remedies proposed, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments,” said the statement.
