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Hyundai Merchant Marine – The First Redressive Duty on Unfair Pricing Practices in Maritime Transport

Published online by Cambridge University Press:  21 July 2009

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Extract

On 22 December 1986 the Council of the European Communities adopted Regulation 4057/86/EEC, dealing with unfair pricing practices in maritime transport. This Regulation was designed to combat unreasonably low shipping tariffs made possible by state subsidies. On 4 January 1989, the Council imposed, in the form of regulation 15/89/EEC, the first redressive duty based on this Regulation on cargo transported by a South Korean company.

Type
Current Legal Developments
Information
Leiden Journal of International Law , Volume 2 , Issue 2 , November 1989 , pp. 247 - 253
Copyright
Copyright © Foundation of the Leiden Journal of International Law 1989

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References

1. Official Journal of the European Communities 1986 L 378 at 14 (31 Dec. 1986).

2. Council Regulation (EEC) No 15/89 of 4 January 1989 introducing a redressive duty on containerized cargo to be transported in liner service between the Community and Australia by Hyundai Merchant Marine Company Ltd of Seoul, Republic of Korea; Official Journal of the European Communities 1989 L 4 at 1(6 January 1989).

3. This sentence is meant to give a general idea of the two concepts and is not to be taken as an exact definition. As a matter of fact, the EEC definition of what constitutes dumping and/or subsidies takes up several pages, so things are obviously more complicated than this.

4. In the EEC, the threat of duties is often enough to persuade the offending firm to enter into a formal price-raising agreement with the EC authorities, a so-called price undertaking.

5. According to some, the EEC's fondness for anti-dumping and anti-subsidy measures may amount to protectionism; see, Europe's trade policy – A gun that needs to get knotted?. The Economist 92–99 (15 Sept. 1989).

6. Official Journal of the European Communities 1988 L 209 at 1 (2 Aug. 1988).

7. SeeBellis, J.-F.Vermulst, E. and Musquar, Ph.The New EEC Regulation on Unfair Pricing Practices in Maritime Transport: A Forerunner of the Extension of Unfair Trade Concepts to Services?, 22 Journal of World Trade Law 47–65 (1988).Google Scholar

8. The imposition of a redressive duty, just like that of an anti-dumping or anti-subsidy duty, is regarded as a measure of a legislative nature, since it applies to all importers. Consequently, it is taken in the form of a Regulation, rather than in the form of an (individual) Decision. However, companies named in a Regulation can challenge it in an action for annulment (Art 173 EEC Treaty) as if it were a Decision adressed to them. See cases 239 and 272/82, Allied Corp. v. Commission of the EC, ECR 1984, 1005, especially par. 11 and 12.

9. Par. 1–9 Reg. 4057/86/EEC.

10. The use of a representative company is the normal technique under Art. 3 (c), Reg. 4057/86/EEC, both when using actual rates and when using calculated ones.

11. Par. 10–14 of the Regulation.

12. Par. 15–20 of the Regulation.

13. Par. 21–24 of the Regulation.

14. Par. 23 part 7 of the Regulation.

15. Art. 1 Reg. 4057/86/EEC.

16. According to Bellis, Vermulst and Musquar, op. cit., 51–52, it is not clear whether ‘major injury’ implies a higher or lower standard than ‘material injury’. Personally, I think it is higher than ‘material injury’, but lower than the ‘serious injury’ criterium used in the EEC's safeguard measures based on Reg. 288/82/EEC, Official Journal of the European Communities 1982 L 35 at 1 (1982).

17. Par. 26–29 of the Regulation.

18. E.g. Art. 11 of Reg. 4057/86/EEC, Art. 11(1) and 12(1) of Reg. 2423/88/EEC, Art. 16(1) of Reg. 288/83/EEC (safeguard measures), Art. 11(1) of Reg. 1765/83/EEC (imports from state-trading countries), and Art. 11(1) of Reg. 1766/82/EEC (imports from the PR of China).

19. Par. 36 of the Regulation.

20. The twenty-foot equivalent unit (TEU) is the normal unit for measurement of container capacity in the liner industry. E.g. a 40-foot container is two TEU.

21. The duty does not apply to containers discharged in EEC ports. According to par. 7 of the Regulation, only transport to Australia was investigated in the Hyundai case.

22. Art. 3(c)(ii).

23. Note that, according to the Arts. 1 and 3(a), the unfair pricing Regulation applies only to liner shipping.

24. All cargo transported at rates higher than the variable costs help to absorb the fixed costs of maintaining a liner service. These variable costs are as low as one-quarter of the total costs. Inflexible demand and supply patterns tend to continue a situation of oversupply.