Impact of the EU Law on the Greek Shipping Sector

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  • January 18, 2017

Impact of the EU Law on the Greek Shipping Sector

Impact of the EU law on the Greek shipping sector and local competition & business laws:

Legal advice to Greek shipping sector clients, often requires an ample knowledge of the evolving role of the European Union in shaping competition regulations in the Greek shipping sector .The entry of Greece into the EU has meant that EU competition laws need to be complied with to thwart destructive competition and predatory pricing locally. Hence it is pertinent to note that in the last two decades, there have been ample regulatory changes to ensure clear local means of market entry for independent and small ship owners, fare regulation, crew quality control and finally public service obligations as well as the enforcement of license terms in terms of the certification of maritime operational and environmental safety.

Prior to the nineties Greek regulation for the maritime environment and the shipping sector was much more concise about ensuring fair competition through the regulation of on-board member specifications, prices of board meals as well as concessions to a variety of social groups such as MP’s, students and journalists during the sea transport affairs. By the mid-nineties the Greek government was however worried about ending catastrophic competition between coastal ship-owners and hence strategic legal obstacles to market entry in the shipping industry were instituted through the use of permits and vessel routes to give the industry the benefit of slight protectionism and allowing stability for the existing companies. This was done on the advice of the Hellenic Coastal Transport Advisory Committee (CTAC), which was composed of public sector and private sector personnel from the chamber of commerce alike.

In 1993 a Presidential Decree was passed in this regard which enabled the CTAC to produce non-binding recommendations and recommendations on pricing and licensing in the shipping industry. Interestingly these licenses also helped the major industrial players based on their long duration. Initially this also helped local Greek shipping cartels and their vessels to dominate over certain routes. Furthermore many powers at this point were given to the maritime ministry and the Public Sector leadership to make decisions about routes and fares during the busy transport times of the year. Coastal shipping in particular was dealt with the Public Maritime Law Code and there is a national requirement that such ships can only be allowed in the area if they carry the Greek National Flag and to be registered on the Hellenic Ship Register. Under Article 11 of the Public Maritime Law Code the flag requirement is defined as compulsory for any ship, which has more than 50% of Greek national ownership. Additionally the Code also provides for the provision of services for less than cost effective routes and care is taken upon maintaining competition and shipping quality on the same routes.

Additionally there is much legislation on the way routes are organized for the servicing of such difficult routes and as such regulation will at times require compulsory servicing for the local ship owners in terms of frequency for the public benefit and over all credibility of the Greek Shipping Industry.

Greek entry into the EU has also provided a succinct and relevant role in stopping ‘cabotage’, modernization of fleets and consolidation of the current law and policy. It can be remembered that in the early nineties negotiations for a sound place for the Greek shipping owners led to an agreement on the elimination of “cabotage’ practices “which were to be phased out by the year 2004.

The EU Council of Ministers passed the Regulation 3577/92 whereas Article 1 of the Regulation laid down the framework for the provision of maritime transportation services within the EU base to all ships carrying the flat of an EU member state. The more immediate impact of such negotiations was that the regulatory framework had stability and the change affected mainly the structure of the coastal shipping market. The entry into the EU’s scheme of things paved the way for market consolidation, fleet modernization, and corporate restructuration of the dynamics of the Greek Shipping Industry. Along this point we have also seen a corporate re-emergence of the strength of the Private sector. Additionally the emergence of new private corporate actors has had a political impact on the way business associations etc. are composed as demonstrated by Article 5 of the PMLC and the YEN Decision, No. 90062/090279 5 Lloyd’s List, July 6, 1992.

It can be concluded that while Greek entry into the EU has paved the way for extensive liberalization, it has paved the way for smaller companies to be gobbled up by smaller longstanding coastal companies disappeared through mergers and acquisitions. During this period the state and the trade unions were against such liberalization as well and continued to oppose any proposals for the deregulation of the shipping sector in Greece. In the wake of these reforms, it has been possible to note that the private sector shipping in Greece has gone through a major upheaval after this period as we saw a large-scale technological and regulatory fleet modernization. Additionally the same wave of liberalization also coincided with the EU open market goals and throughout this period there was news that the government authorities would back the future liberalization measures.

It is interesting to note hence, how the application of EU trade and competition regulation has induced a movement towards deregulation and competition in Aegean coastal trade with an orchestration of a string of mergers and acquisitions with small owners offering their tonnage within the larger structure of MFD by the propagation of the formation of a stealthy Greek Shipping Industry which would essentially keep away the EU operators.

Even today, the local Greek Shipping labour and trade unions however continue to oppose the deregulation of the Greek shipping industry, where as their worst fears regarding enhanced competition as a result of the EU laws have come true, as ship-owners scurry to reduce their crew expenses in the wake of cost efficiency and minimum wages have hit rock-bottom in the Greek economy. With the Maritime Shipping Association not exercising its discretion and control over the crew composition, the quality of shipping has gone down. Also in Greece as well the 17 other other EU countries GDP has fallen considerable during the last quarter of 2012.The period after the subprime crisis has brought bad times for the Greek Shipping sector entrepreneurs and workers again. One reason may be that world trade slowed last year with major export-driven economies like Japan and Germany shipping less than in 2011. Also imports to many countries of Europe from the U.S.A also showed shrinking and decline. This economic slowdown may be bad news for the proponents of liberalized laws and regulation allowing healthier competition and healthier economies. Perhaps the Greek government should take steps to protect its bread and butter through more strategic ways and investments.

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