Japanese carriers start merger process, get Europe’s approval

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Japan’s three biggest container shipping liners said they are now establishing a new company in line with the merger of their business operations despite their plan being rejected by the United States and South Africa.

Meanwhile, the European Commission (EC) has given its nod to the three carriers’ union.

In a joint notice posted on July 3, Kawasaki Kisen Kaisha (K Line), Mitsui O.S.K. Lines (MOL), and Nippon Yusen Kabushiki Kaisha (NYK) said, “The new company to be established has received all necessary approvals for compliance with local competition laws in regions and countries where compliance is required for the new company’s establishment, and progress is being made towards completing the establishment of the new integrated container shipping business.”

It added that further details would be announced once all establishment procedures are completed.

In previous press releases, Japan’s “Big Three” had declared they expected to set up a holding company and an operating company by July 1, 2017, as part of a plan to integrate their container shipping businesses, including terminal operations outside Japan.

However, in early May of this year, the U.S. Federal Maritime Commission rejected the proposed merger on jurisdictional grounds.

This was followed by the Competition Commission of South Africa denying last month the merger proposition , claiming the merger “increases the likelihood of coordination as it creates further structural linkages in the container liner market.”

But NYK, MOL, and K Line insisted in their July 3 notice that in South Africa, “the new company expects to complete the approval process for compliance with competition law before the service commencement date of April 1, 2018.” They did not give further details.

“Overall, there is no impact on the three companies’ integration plans for the new container shipping business, and the service commencement date for the new company is likewise unchanged from April 1, 2018,” they added.

In Europe, meanwhile, the EC on June 29 approved the joint-venture proposal of the three shipping firms. In its decision, the commission said that after examining the transaction, it concluded that “the proposed acquisition would raise no competition concerns given the limited impact of the transaction on the routes to and from Europe and the fact that there would be sufficient competitive pressure from other competitors post transaction.”

In early June, the three Japanese carriers announced they intended to name their new merged entity “Ocean Network Express,” or ONE, and launch it April next year.

Photo: Debivort