The tramp shipping business and the EU competition law : An introductory view of tramp shipping pools under Article 101 TFEU
Tutor / director / evaluatorRodrigo de Larrucea, Jaime
Document typeBachelor thesis
Rights accessOpen Access
This paper is an effort to understand how the tramp shipping industry works, which is considered to work close to perfect competition model, where the atomicity, homogeneity and information transparency are evident. Many small shipping companies compete for a volatile and unpredictable demand. Despite there are some entry barriers to the market, these can be easily mitigated by the way this market works. Tramp shipping companies co-operate among them in pools, in order to bid for large contracts of affreightment, which otherwise, shipowners could not perform on their own. Tramp shipping pools raise competition concerns, and under the EU Competition Rules, these agreements shall be assessed on case-by-case basis in order to determine whether an agreement may jeopardise competition within common market. To do so, an assessment under Article 101 TFEU is required. Normally, tramp shipping pools created for the right purposes, do not entail competition restrictions. Conversely, those agreements that have a combined market share considerably high or involve hardcore restrictions, are prohibited under Article 101 (1). These agreements have three options: terminate their agreement; demonstrate that economic efficiencies brought by the agreement outweigh restrictions under Article 101 (3); and lastly and most appealing, try to restructure the agreement creating a full-function joint venture in order to fall under a more certain legal framework, the EC Merger Rules.