Commitments offered to the European Commission under Article 9 of Council Regulation (EC) No 1/2003

Preamble
In accordance with Article 9 of Council Regulation (EC) No 1/2003 (“Regulation 1/2003”), China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited offer the following commitments (“Commitments”) to the European Commission (the “Commission”) with a view to meeting the Commission’s concerns as set out in the Commission’s preliminary assessment (“Preliminary Assessment”) dated 26 November 2015 in the context of its investigation in Case AT/39.850 – Container Shipping and enabling the Commission to adopt a decision pursuant to Article 9 of Regulation 1/2003 confirming that the Commitments address its concerns and making them binding on China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited  (“Commitment Decision”).

Consistent with Article 9 of Regulation 1/2003, these Commitments are given on the understanding that the Commission will confirm, by adoption of its Commitment Decision, that there are no grounds for further action in relation to China COSCO Holdings Company Limited or COSCO Container Lines Company, Limited in Case AT/39.850 and will close the Commission proceedings opened on 21 November 2013.    The Commission has not established that there is any evidence that an infringement of EU or EEA competition law has occurred and makes no determination as to the existence of such an infringement.

For the avoidance of doubt, these Commitments are offered without admission of infringement or liability.  China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited each strongly contest the concerns expressed by the Commission in the Preliminary Assessment and do not accept that either of them has engaged in unlawful conduct contrary to Article 101 TFEU or Article 53 EEA or any other aspect of EU or EEA competition law.

These Commitments are offered on the basis that, in accordance with the principle of proportionality, the Commission will not take enforcement action in relation to non-material breaches of these Commitments. 

Article 1 – Definitions
For the purpose of these Commitments, the terms listed below shall have the following meaning:

“China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited” means and includes (as the case may be) China COSCO Holdings Company Limited, COSCO Container Lines Company, Limited and any connected undertaking under the direct or indirect control of either of them.

“Communication” means any non-public form of communication outside of China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited.

“Price” means the monetary sum or sums charged by China COSCO Holdings Company Limited or COSCO Container Lines Company, Limited for the provision of carriage of containerised cargo by sea.

“Price Announcement” means Publication or Communication regarding Prices or Price changes.

“Publication” means the dissemination of information, including in the form of newsletters and customer advisories, on any website of China COSCO Holdings Company Limited or COSCO Container Lines Company, Limited, in the media or in any other publicly accessible medium.

“Purchaser” means a purchaser of container shipping transport services.

“Rate Agreement” means a bilaterally negotiated agreement between China COSCO Holdings Company Limited or COSCO Container Lines Company, Limited and a Purchaser for the carriage of containerised cargo by sea concluded for a duration of more than 31 days.

Article 2 – Scope of Commitments
a) These Commitments apply to container liner shipping services to and from the European Economic Area.

b) Except as specifically set forth herein in relation to Price and Price Announcements, these Commitments do not affect any of China COSCO Holdings Company Limited or COSCO Container Lines Company, Limited’s rules, acceptance policies, procedures and terms and conditions, and do not give rise to an obligation to contract.

c) These Commitments do not apply to financial information, such as general information about China COSCO Holdings Company Limited or COSCO Container Lines Company, Limited’s financial situation and financial perspectives, and general market and pricing trends, provided by China COSCO Holdings Company Limited or COSCO Container Lines Company, Limited to actual or potential investors, financial analysts and financial journalists.

Article 3 – Publication and Communication of Price changes
Subject to the terms of these Commitments, China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited shall cease the Publication and Communication of changes to the Price or any element thereof expressed solely as the amount or percentage of the change (sometimes referred to as General Rate Increases).

Article 4 – Price Announcements
Subject to Article 6 of these Commitments:
a) China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited may make Price Announcements for all or some of the port pairs they serve. Price Announcements shall include at least all the following elements of the Price:

  1. The basic charge for the carriage of container by sea (the Base Rate).
  2. Bunker related charges and surcharges.
  3. Security related charges and surcharges.
  4. Charges to recover costs levied by terminal operators for the handling of containers (Terminal Handling Charges).
  5. Additional charges and surcharges reflecting foreseeable high demand (such as Peak Season Surcharges).

b) The elements of the announced Price may be presented separately (either in the Price Announcement itself or by way of a link to a website of China COSCO Holdings Company Limited or COSCO Container Lines Company, Limited) and/or in aggregation, in a form easily understandable to Purchasers.

c) The elements of the announced Price may be presented either as a numerical amount or as a formula, in a form easily understandable to Purchasers.

d) China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited shall state in their Price Announcements which elements of the Price in addition to those specifically identified in the Price Announcement, if any, may apply.

e) China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited shall define in their Price Announcements the services to which the announced Price applies.

f) China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited shall state in their Price Announcements either (i) the sailing period or (ii) the date of the first scheduled sailing to which they apply.

g) China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited shall not make Price Announcements more than 31 calendar days before (i) the beginning of the sailing period or (ii) the date of the first scheduled sailing to which they apply.

Article 5 – Binding Price Announcements
a) Price Announcements shall be binding on China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited, for the period stated in the Announcement (if any) or, in case the period is defined from a certain date and “until further notice”, until superseded by a subsequent Price Announcement, as to the maximum Price chargeable in respect of the relevant services to which the Price Announcement applies. Price Announcements shall not prevent the Communication or Publication of lower Prices for such services.

b)Communications shall only have the binding effect provided for in paragraph a) with respect to the addressees of the relevant Communication.

Article 6 – Communications to Purchasers
a) These Commitments do not apply to Communications to Purchasers that have a Rate Agreement in force on the date of the Communication and where the geographical scope and direction referred to in the Rate Agreement is within the geographical scope and direction to which the Communication refers;

b) These Commitments do not apply to Communications during bilateral negotiations or Communications tailored to the needs of identified Purchasers, on condition that they do not lead to a higher price than that set out in any relevant Price Announcement (made in accordance with Article 4) that is applicable to those particular services. This condition does not apply to Rate Agreements where a relevant Price Announcement is stated to be valid “until further notice” or to contracts, including Rate Agreements, for services which differ from those set out in a relevant Price Announcement (for example, without limitation, because of additional Price or volume certainty).

Article 7 – Conflict of Laws
These Commitments do not prevent China COSCO Holdings Company Limited or COSCO Container Lines Company, Limited from complying with laws or regulations of any jurisdiction that are, in the reasonable and good faith belief of China COSCO Holdings Company Limited or COSCO Container Lines Company, Limited, in contradiction with these Commitments provided that China COSCO Holdings Company Limited or COSCO Container Lines Company, Limited inform the Commission in advance or, if such advance notice is unworkable, promptly of any such laws or regulations.

Article 8 – Obligations in relation to agents
Nothing in these Commitments shall prevent China COSCO Holdings Company Limited or COSCO Container Lines Company, Limited from giving pricing and related instructions to their duly authorised agents.  However, China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited shall include in their instructions to agents an obligation to comply with the terms of these Commitments when acting for and on behalf of China COSCO Holdings Company Limited or (as the case may be) COSCO Container Lines Company, Limited, shall take reasonable steps to ensure that their agents comply with such an obligation and shall impose deterrent sanctions in the event of non-compliance.

Article 9 – Entry into force of the Commitments
These Commitments shall enter into force on 7 December 2016 (5 months after the date on which the Commission has adopted the Commitment Decision in respect of China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited).

Article 10 – Duration of the Commitments
These Commitments shall be in force for a period of 3 years.

Article 11 – Reporting
China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited shall (individually or jointly) provide the Commission with 4 reports on the steps taken by them to implement these commitments. The reports shall be provided 3, 12, 24 and 36 months after the entry into force of these commitments.

In their reports China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited shall include in particular the following explanations:

(i) When China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited ceased making Publications and Communications according to Article 3 above.

(ii) Whether they made Price Announcements and how they ensured their compatibility with these Commitments.

(iii) Whether, in conformity with Article 6 a), they made Communications in respect of changes to the Price, or any element thereof, expressed solely as the amount or percentage of the change, and what steps were taken in order to ensure that they were made only to the Purchasers mentioned in Article 6 a) above.

(iv) The steps that were taken in order to train their employees and agents in the application of these commitments.

(v) The steps that were taken in order to monitor compliance of their employees and agents with these commitments.

(vi) Whether any problems were detected in the implementation of these commitments and what steps were taken in order to solve them.

Article 12 – Review Clause
In accordance with Article 9(2)(a) of Regulation 1/2003, China COSCO Holdings Company Limited and/or COSCO Container Lines Company, Limited may request the Commission to reopen the proceedings where there has been a material change in any of the facts on which the Decision was based.

Article 13 – Publication of the Commitments
China COSCO Holdings Company Limited and COSCO Container Lines Company, Limited shall publish these Commitments in a prominent way on their websites throughout their duration.