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Sept.7, 2015

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GOVERNMENT WATCH INTERNATIONAL | WASHINGTON | CUSTOMS | SECURITY | REGULATION THE JOURNAL OF COMMERCE 17 Byline CONTAINER SHIPPING CARRIERS are in a quan- dary in Hong Kong. With a new competition law scheduled to take effect on Dec. 14, the Hong Kong Competition Commission says no decision on a block exemption for ocean carriers will come before that date, making their business activity illegal two weeks before the end of the year. More than 95 percent of Hong Kong's liner shipping activity involves vessel-shar- ing agreements that would be outlawed after the competition law is in place, with penalties of up to 10 percent of a company's revenue. Although the commission said it wouldn't be in a position to offer any rulings on block exemptions before the law takes effect, it indicated it was willing to accept advance applications for such from affected industries. Roberto Giannetta, secretary general of the Hong Kong Liner Shipping Association, takes this as a positive sign. "This is a slight departure from their earlier assertions, and we welcome this indication of willingness on their part to begin consultation and review of applications before Dec. 14," he said. Still, the commission's willingness to accept advance submissions before the law takes effect does little to remove uncertainty across a host of industries. Giannetta said his association would submit an application for block exemption before the law takes effect. "We hope to have some form of signal or indication from HKCC on what might happen on Dec. 14 ahead of time, so that shipping lines have time to amend their operations if legal cer- tainty is not assured concurrently with the commencement order of the law," he said. One option for the commission, Gian- netta suggested, would be to offer a grace period. When Singapore imposed a new competition law, companies that had applied for block exemptions were exempted from prosecution until the applications could be reviewed. In Malaysia, a temporary block exemp- tion was introduced on the day the law took effect, Giannetta noted, and the temporary exemption lasted until a final ruling on the application could be made. "This has not been discussed nor con- firmed by HKCC, but we certainly hope that some solution will be made available to shipping lines to avoid any gap between application of the law and legal assurance that carrier cooperative agreements are able to operate without challenges or penalties," he said. The Hong Kong Container Terminal By Greg Knowler PUTTING THE CART BEFORE THE HORSE Hong Kong says its new competition law will take effect before considering any exemption for container shipping

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