On June 17, 2014, China’s Ministry of Commerce (MOFCOM), China’s competition regulator, prohibited the proposed “P3 Alliance” that would have combined the world’s three largest container carriers—Maersk Line, Mediterranean Shipping Company and CMA CGM—on certain shipping routes.
MOFCOM prohibited the deal despite the U.S. Federal Maritime Commission (FMC) clearing the transaction in March 2014, and the European Commission (Commission) announcing its decision not to open an investigation just two weeks prior to the MOFCOM prohibition. The differing outcomes resulted from each authority analyzing only the effects of the deal relating to its respective market. The FMC did not analyze Asia-Europe routes since it has no jurisdiction over it and, conversely, MOFCOM did not analyze Europe-North America routes. Moreover, while the FMC and Commission assessed the deal under their respective competition rules applicable to cooperative agreements between independent undertakings, MOFCOM assessed the deal as a concentration and therefore applied merger control rules and its related economic analysis, which allow non-competition factors such as macroeconomics and collective policy considerations to be taken into account.
Characterising the P3 Alliance as a cooperative agreement rather than as a merger meant that the FMC and the Commission had limited power to impose ex ante remedies or to prohibit the deal at the outset, since antitrust law applicable to cooperative agreements in the U.S. and EU can usually be enforced ex post only. On the contrary, merger control rules normally allow the regulators to intervene ahead of the implementation of the transaction.
MOFCOM’s reasons for characterizing the P3 Alliance as a merger are unclear, however, because just 10 days ahead of its prohibition decision, MOFCOM revised its merger review guidance. It appears that MOFCOM was concerned that the P3 Alliance would have controlled 46.7 percent of the Asia-Europe shipping route market and therefore would have raised barriers for new entrants and put smaller rivals at a disadvantage. This is only the second time MOFCOM has prohibited a merger since China introduced its antitrust regime in 2008 (the first prohibition addressed the acquisition of juice-maker Huiyuan by Coca-Cola in 2009); but it is the first time that the regulator has blocked a global transaction among foreign parties.