EATA illegal, Brussels says. (Europe Asia Trades Agreement)(includes related articles)

EU's competition regulators leave no doubt about their attitude toward capacity management agreements.

Competition regulators in Brussels can't muster much empathy for shipowners who complain about overcapacity while placing orders for record numbers of giant container ships.

This was the message delivered to members of the Europe Asia Trades Agreement (EATA) when the European Commission launched a legal action against the 18-carrier pact.

According to a statement of objections sent to EATA and made public in May, the Commission found the agreement to be illegal because it does not fulfill conditions required for antitrust exemption in the European Union.

Formed in late 1992, EATA is made up of members of the Far Eastern Freight Conference and several non-conference lines operating in the trades between Europe and the Far East.

They founded EATA so they could cooperate to balance the eastbound marketplace's vessel capacity supply with demand. Together, its members have a market share of about 85 percent.

Shortly after EATA's debut, Asian and European shippers groups complained to the Commission that EATA could hurt shippers because of its potential influence in the marketplace.

Taking the shippers' side, the European Commission's directorate general for competition, DG IV, delivered a statement of objections to EATA spelling out why it believes the agreement contravenes European Union competition law.

EATA had until early June to respond to the Commission's statement.

It was not clear whether EATA would request an extension, which often happens in such cases. Nor was it clear when the next step, an oral hearing, would take place. But with summer holidays looming, prospects for a pre-autumn court date were slim.

'Violates Treaty Of Rome.' EATA violates the Treaty of Rome, the EU constitution, DG IV indicated in its statement of objections.

To qualify for exemption from the treaty's competition rules, an agreement must:

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