Serious Investigation On Supply Chain Collusion & Cartel Conduct

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A recent news article published in the Loadstar states that Five Eyes widens focus onto ‘supply chain collusion’ and ‘cartel conduct’.

Investigation of supply chain collusion

The anglosphere “Five Eyes” nations have widened their intelligence gathering to investigate supply chain collusion.

Amid soaring consumer prices and unprecedented supply chain disruption, competition authorities from the US, UK, Australia, Canada and New Zealand have formed a working group to “put firms on notice” over suspected anti-competitive behaviour, collusion, and “using Covid as an opportunity for cartel conduct”.

UK’s Competition and Markets Authority (CMA)

The UK’s Competition and Markets Authority (CMA) said the agencies were concerned that “some unscrupulous businesses could take advantage of the disruptions to engage in anti-competitive collusion and practices that cheat other businesses and ultimately consumers”.

Michael Grenfell, CMA’s executive director of enforcement, said: “While price rises can be legitimate, the CMA would be concerned if collusive anti-competitive practices are contributing to these rises or preventing prices from coming down.

“These are global issues that are best addressed together. With support and intelligence from partner agencies across the world, we can step in and take enforcement action if we find evidence of anti-competitive behaviour.”

CMA’s encouraging

The CMA is encouraging businesses and individuals to share information on supply chain collusion via its “cartels hotline”.

Indeed, European forwarder group Clecat has called on the EC to urgently investigatewhat it calls the “distorted” liner market.

Scrutiny of supply chain and logistics companies has been escalating since the Covid-crisis began and shipping lines in particular started making mind-bogglingprofits. These are being quickly funnelled into rampant M&A activity and vertical consolidation.

Global Shippers’ Forum

For example, the Global Shippers’ Forum has taken aim at the “unfair” container line market, claiming the block exemption regulation in Europe effectively allows behaviour which would be criminal in other industries.

In the US, the Ocean Shipping Reform Act could drastically increase regulatory scrutiny of shipping lines and help address “systemic issues contributing to the chaos at US seaports and unprecedented disruption to the ocean shipping network”, according to the National Industrial Transportation League.

Liner lobby group World Shipping Council called the act “deeply flawed”, however, and said carriers had “deployed every available ship and container to move the continuing record levels of cargo resulting from pandemic-driven US demand for imports”.

In Australia, a laundry list of complaints over congestion surcharges and detention and demurrage costs have been hurled at carriers by shippers and forwarders who have also slammed carriers’ sky-high freight rates and all-time lows in schedule reliability.

Paul Zalai, director of Australia’s Freight & Trade Alliance, claimed the shipping line market was “operating without genuine competitive tension”.

And Reuters reported yesterday that the “US Justice Department’s antitrust division and the FBI announced an initiative to detect and prosecute companies that take advantage of supply chain disruptions to collude with rivals in order to raise prices”.

In Australia, forwarders have seen a concerted effort by carriers to shift their focus to shippers, with a view to cutting out freight forwarders from the market, according to one forwarder The Loadstar spoke to. He alleged that Maersk had completed a deal with the major shipper K-Mart to handle all 160,000 containers from the shipper, with an agreement by the Danish carrier to give it priority rates.

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Source: The LoadStar

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