European Commission Approved Ocean Network Express Alliance

The European Commission has approved, under the EU Merger Regulation, the creation of the Ocean Network Express alliance between Nippon Yusen Kabushiki Kaisha (NYK), Mitsui OSK Lines (MOL), and Kawasaki Kisen Kaisha (K Line). The Commission decided that, 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 following the transaction, the proposed alliance raised no competition concerns.

The joint venture, often referred to as the ‘Ocean Network Express’ or ONE, intends to integrate the global container liner shipping activities and container terminal businesses (excluding their terminals in Japan) of NYK, MOL, and K Line. According to the three shipping companies, the partnership will allow the ONE to better meet its customers’ needs, by providing high-quality, competitive services by consolidating and enhancing of the three companies’ global network and service structures.

Scheduled to launch at the beginning of April 2018, the Ocean Network Express will establish a holding company in Japan with the global headquarters based in Singapore. Additionally, regional headquarters will be set up in London, UK; Richmond, Virginia, US; and São Paulo, Brazil. The joint venture would operate a fleet totaling 1.4 million TEU, with a 7 percent global market share. This places the combined entity as the sixth largest container shipping line in the world, behind Hapag-Lloyd.

The members of the ONE alliance await a formal decision from the United States’ antitrust authorities, the U.S. Department of Justice Antitrust Division and the Federal Trade Commission. The Federal Maritime Commission (FMC), with no power over the proceedings in the United States, has expressed concern over what they view as a ‘merger without a merger’ type agreement.