- The European Commission (EC) on Wednesday approved COSCO Shipping's purchase of Orient Overseas Container Lines' (OOCL) parent company, Orient Overseas International Limited (OOIL), without conditions.
- The transaction would affect eight trade routes, according to the regulator: "Both legs of the Northern Europe to North America, Northern Europe to the Far East, Mediterranean to the Middle East and Mediterranean to the Far East trade routes."
- Although the deal would have "very significant" effects on the Northern Europe to North America trade routes, the EC concluded it led to no antitrust concerns due to the "presence of significant competitors post-merger" and the lack of existing competition between COSCO and OOCL.
The regulatory approval clears the way for one of the shipping industry's largest deals, and highlights the global antitrust community's willingness to permit greater carrier consolidation.
The industry shook when COSCO announced its $6.3 billion deal of OOIL in July. If the deal was approved, COSCO would leap over CMA CGM as the third largest carrier by capacity, according to Alphaliner data. Most importantly, the purchase would further reduce the number of major shipping lines available to shippers.
If all current deals are approved — and it appears they will be — six carriers will control at least two thirds of the world's shipping capacity.
Top 6 ocean carriers by capacity, if all proposed deals are approved
|Rank||Company||Capacity (TEUs)||Market Share|
|2||Mediterranean Shipping Co.||3,081,196||14.7%|
|6||Ocean Network Express||1,436,502||6.9%|
SOURCE: Alphaliner TOP 100, retrieved 7/9/2017
JOC.com reports the EC's approval of the COSCO-OOIL deal follows a "tacit approval" by the U.S. in October, and a formal approval by China's antitrust regulator. Industry analysts often look to these three regulators for signs of a failed deal, as denial by any of these major markets could reduce the incentives for the deal to take place altogether.
Europe's approval without conditions therefore points to what appears will be an incredibly seamless shipping industry mega-merger.
However, regulatory approvals do not mean conditions will not change for shippers. After all, in its rationale, the EC notes the COSCO-OOIL deal will have a significant impact on the Northern Europe to North America trade lane. The reason it provides to offset those concerns, though, is that major carriers including Maersk Line, MSC and CMA CGM will help maintain competitiveness. Shippers should hope they are correct.