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India Fines Japanese Car Carrier Companies for Illegal Cartel

Indian fines car carrers for operating cartels
India is the latest country to fine the car carrier companies for forming cartels (file photo)

Published Jan 24, 2022 1:19 PM by The Maritime Executive

Indian authorities fined several of the major Japanese car carrier companies after finding the firms guilty for violations of India’s Competition Act, which prohibits anti-competitive agreements including cartels. The Competition Commission of India (CCI) imposed a total fine of nearly $8.5 million, while also holding libel executives of the companies for the anti-competitive conduct and passing a cease-and-desist order against the illegal cartel. The car carriers in the past have been found guilty of similar charges in other countries.

After reviewing all of the evidence, the CCI entered its final order against Nippon Yusen Kabushiki Kaisha (NYK Line), Kawasaki Kisen Kaisha (K-Line), Mitsui O.S.K. Lines, and Nissan Motor Car Carrier Company for having created and operated a cartel impacting the maritime motor vehicle transport services operated on multiple trade routes for original equipment manufacturers. The investigation found that NYK Line, K-Line, MOL, and NMCC between 2009 and 2012 had operated under a “Respect Rule,” which the regulators said implied avoiding competition with each other and protecting the business of incumbent carrier with the respective OEM.

The commission says that the four operators of car carrier services “resorted to multi-lateral as well as bilateral contacts, meetings, e-mails with each other to share commercially sensitive information.” They regularly shared information about freight rates. “They also aimed to preserve their position in the market and maintain or increase prices, including by resisting requests for price reduction from certain OEMs.”

In addition to finding the four companies guilty of “contravention of the provisions of the Competition Act,” the CCI also held employees at each of the companies liable for the anti-competitive conduct. A total of 14 at NYK Line, 10 at K-Line, six at MOL, and three at Nissan were found liable for the actions of their respective companies.

Each of the companies filed applications with the CCI seeking lesser penalties. The largest fine was imposed against Nissan Motor Car Carrier Company and its employees totaling approximately $3.84 million after having been reduced by 30 percent. The fine imposed against K-Line and its employees is approximately $3.24 million, while MOL and its employees were fined approximately $1.35 million after a 50 percent reduction. On review, the ICC decided to reduce by 100 percent the fine against NYK and its employees. The companies were also ordered to stop any cartel actions and not peruse agreements in the future.

It is not the first time car carrier companies have been found guilty of cartel practices. In 2016, NYK plead guilty in Australia to criminal cartel conduct also related to the shipment of vehicles. In the long-running case in Australia, K-Line also plead guilty to criminal cartel conduct in 2018 and Wallenius Wilhelmsen in 2020. MOL was included in the Australian case which was also said to revolve around a similar “rule of respect.”

South Korea’s Fair Trade Commission also found in 2017 that several companies including MOL, NYK, K-Line, Nissan Motor Car Carrier, Hoegh, Wilhelmsen, and others had breached South Korean antitrust law for car carrier services. The FTC fined nine companies more than $37 million, but in that case, MOL and Nissan Motor Car Carrier Co. were granted leniency and not fined.