The European Commission last week has approved under the EU Merger Regulation the creation of a joint venture between Japanese shipping companies Nippon Kabushiki Kaisha Ltd. (NYK Line), Mitsui O.S.K. Lines, Ltd. (MOL), and Kawasaki Kisen Kaisha Ltd. (“K” Line).
The joint venture, dubbed the Ocean Network Express (ONE), will integrate the companies’ global container liner shipping activities and container terminal businesses, excluding their terminals in Japan.
The commission said it “concluded that the proposed acquisition would raise no competition concerns 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 post transaction.”
The EC’s decision came in the wake of the Competition Commission of South Africa prohibiting the merger a week prior, claiming it would encourage anti-competitive behavior in the liner markets and the car carrier sector.
The three ONE Alliance members said the new company to be established has received all necessary approvals for compliance with local competition laws in regions and countries where compliance is required for the new company’s establishment, and that progress was being made toward finishing the process of establishing the new integrated container shipping business.
NYK, MOL and "K" Line said the new company expects to complete the approval process for compliance with South African competition law sometime prior to the projected service commencement date of April 1, 2018, adding that the rejection by South Africa’s competition commission did nothing to halt the alliance’s momentum. The South Africa market accounts for just four percent of the ONE Alliance member companies’ total globally deployed capacity, according to industry analyst Alphaliner.
“Overall, there is no impact on the three companies’ integration plans for the new container shipping business, and the service commencement date for the new company is likewise unchanged from April 1, 2018,” the member carriers said in their joint statement.
If and when it commences operations, ONE would be the sixth largest container carrier in the world, according to London-based shipping research and consulting firm Drewry.
The joint venture plans to establish a holding company in Tokyo, the global headquarters in Singapore, and regional offices in Hong Kong; London; Richmond, Va.; and Sao Paulo, Brazil.
NYK will be the largest shareholder with 38 percent, while MOL and “K” Line will each hold a 31 percent share.