Arkin v Borchard Lines Ltd. & Ors

A liner conference may constitute a collective entity where its decision-taking structure enables members to adopt a common market strategy, including uniform pricing. Dominance depends principally on relative economic strength and market power, not merely on market share or the willingness to deploy available power. A dominant undertaking may compete on price, including below average total cost, provided its predominant purpose is not to eliminate or materially weaken competition. Predatory pricing requires proof of eliminatory intent where prices exceed short-term net ocean average variable cost. The Block Exemption protects ordinary competitive pricing by a qualifying liner conference, but not conduct whose predominant purpose is to eliminate competition. Article 81 and Article 82 require separate analysis.

The claimant, as assignee of BCL Shipping Line Ltd’s claims, sought damages against members of the CONISCON and UKISCON liner conferences for alleged breaches of Articles 81 and 82 of the Rome Treaty. BCL had operated container services between the United Kingdom, the North Continent and Israel. After the entry of MSC, a prolonged rate war developed and BCL withdrew from the relevant market in October 1991 before ceasing trading in May 1992.

The central issues were whether the conferences formed a collective entity, whether they occupied a dominant position, whether their pricing, alleged use of fighting ships and alleged circulation of insolvency rumours constituted abuse, and whether the conferences remained protected by Regulation 4056/86.

1. Article 82. The two conferences were sufficiently connected by joint decision-making, information exchange, coordinated schedules and common competitive measures to be treated as connected collective entities. The relevant product market was container transport, because demand-side substitution into break-bulk carriage was very limited.
2. The conferences retained a dominant position throughout the relevant period. Their large market shares, established trading experience, extensive service, market intelligence and financial resources outweighed the vigorous competition presented by MSC. Dominance was assessed by the potential ability to reduce materially the competitive capacity of rivals, rather than by the conferences’ willingness to use their full power.
3. There was no abuse. The conferences’ rate reductions were predominantly defensive and aimed at retaining or regaining customers. The rates exceeded short-term net ocean average variable cost. Although they were below average total cost, the claimant failed to prove eliminatory intent. The emergency and selective rate systems likewise lacked sufficient evidence of an eliminatory purpose.
4. The fighting-ships case failed. No particular vessel was shown to have been deployed to coincide with a BCL sailing, and container pre-booking made last-minute diversion of cargo commercially impracticable. The alleged rumours were established in the market, but their attribution to conference members was not proved.
5. Article 81. The conferences operated under uniform or common rates and qualified as liner conferences under Regulation 4056/86. Ordinary competitive rate-cutting, including pricing below average total cost, was not itself inconsistent with Article 81(3) or the Block Exemption. The July 1991 negotiations with MSC pursued an unlawful object, but were severable and did not remove protection from the conferences’ other activities. The claimant therefore failed to establish any breach of Article 81.
6. In any event, the claimant failed to prove causation. BCL’s continuing participation in the market and its later “suicide” rates were the predominant causes of its losses. The claimant also failed to prove that the conferences caused the collapse of the wider Multifleet group or BCL’s cessation of trading.

The claim was dismissed.