European Commission closes the case against Wikborg Rein’s client Odfjell
| 16th May 2008On 8 May 2008, the Commission closed the five-year long cartel investigation against Wikborg Rein’s client Odfjell. The case has been under investigation since 2003, and as late as in 2007 the Commission stated its intention of imposing fines on Odfjell and two other shipowners for alleged breaches of EU’s competition rules. Based on decisional practice in comparable cases, fines could be expected to reach several hundred million NOKs.
In representing Odfjell, Wikborg Rein has consistently argued that the Commission lacks the required legal authority to investigate or fine Odfjell. This follows from the EC Treaty and EEA agreement’s implementing rules with respect to competition law enforcement in the maritime sector. More specifically, Wikborg Rein argued that Odfjell’s maritime services qualified as “tramp vessel services,” and under regulation 4056/86, and subsequently regulation 1/2003, “tramp vessel services” were explicitly excluded from the Commission’s jurisdiction (the enforcement rules has later been changed so that the Commission today has enforcement powers also for “tramp vessel services”).
In 2003, and as a consequence of Wikborg Rein’s written and oral arguments regarding the Commission’s lack of jurisdiction, a market investigation was initiated by the Commission in order to resolve the question of jurisdiction. In course of this investigation, the Commission gathered information regarding the market and Odfjell’s services from the shipowners under investigation, their customers and independent brokers. According to the Commission, the results of the market investigation supported its jurisdiction over the case. In 2007, the Commission proceeded to issue a Statement of Objections against Odfjell and three other shipowners. In the Statement of Objections the Commission takes the view that it has the required jurisdiction over the case and that fines should be imposed on the shipowners.
However, on behalf of Odfjell Wikborg Rein maintained its position that the Commission lacked jurisdiction. Wikborg Rein’s arguments were again explained in detail with regard to both facts and law in an extensive reply to the Commission’s 2007 Statement of Objections. In the Reply, Wikborg Rein pointed out that not even the results of the 2003 market investigation supported the Commission’s view. During the subsequent oral hearing in Brüssels, Wikborg Rein focussed exclusively on the question of jurisdiction in arguing on behalf of Odfjell.
In its 8 May 2008 decision to close the investigation, the Commission acknowledges that it does not have jurisdiction over the case because Odfjell’s services must be considered “tramp vessels services.” On this basis, the investigation is discontinued with respect to all the affected shipowners. In doing so, the Commission also concedes that Wikborg Rein’s arguments regarding the jurisdictional issue were correct. The Commission’s press release can be read here:
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