• On 3 June 2024, the European Commission (the Commission) published its decision in relation to the acquisition of Bolloré Logistics SE (Bolloré) by CMA CGM S.A. (CMA CGM) (the Transaction). The Transaction was cleared with conditions by the Commission on 23 February 2024 and the full decision is available for review.
• The decision largely reaffirms the Commission’s approach to geographical market definition in the liner shipping services sector, but also presents peculiarities, some of which can be explained by France’s unique geography
Introduction
The Commission considered that, as a result of the Transaction, CMA CGM, a global shipping company, and Bolloré, active in the downstream logistics sector, would be able to foreclose certain markets. CMA CGM made commitments to address the concerns that would be brought about by the vertical integration of the parties, specifically in relation to: (i) CMA CGM’s upstream container lining shipping activities on routes connecting Europe with Martinique, Guadeloupe and French Guiana (where CMA CGM has a particularly high market share in upstream markets) and (ii) Bolloré’s downstream freight-forwarding activities in those territories.
These commitments will essentially consist of CMA CGM divesting Bolloré’s legal entities and activities in air-, land- and sea-freight forwarding, as well as contract logistics in Martinique, Guadeloupe, Saint Martin and French Guiana. CMA CGM has also made further commitments to safeguard the divestiture, such as not to entertain any commercial relationship with the divested businesses or to redeploy any freight-forwarding services in the given geographic markets, but also to divest a number of assets located in metropolitan France which are linked to the divested business, as set out in further detail below.
In line with previous decisional practice, the Commission has required the appointment of a monitoring trustee to monitor CMA CGM’s compliance with the Commission’s clearance decision. The trustee will need to provide the Commission with monthly reports that cover the operation and management of the business which will be divested, notably so that the Commission can verify that commitments are being complied with as the divestiture process progresses. On 29 February 2024, the Commission approved the appointment of Advolis SAS as the monitoring trustee for the Transaction.
On 15 July 2024, the Commission issued its approval decision for the purchase of the divested business by the Balguerie Group, a French international logistics company headquartered in Bordeaux.
The Transaction was also cleared by the competition authorities of French Polynesia and New Caledonia, with CMA CGM offering commitments in these jurisdictions as well. Further detail can be found below.
In its decision, the Commission analysed the Transaction’s effects on competition in three main sectors, which will be set out in turn.
Liner shipping services
Deep-sea container liner shipping services
Taking into account CMA CGM’s particularly high market shares in legs of trade from/to each of (i) North Europe and (ii) the Mediterranean, to/from each of Martinique, Guadeloupe, French Guiana, Réunion and Mayotte, as well as the lack of alternatives offered to their freight forwarder customers on those markets, the Commission came to the conclusion that CMA CGM had the potential to foreclose access to liner shipping services for Bolloré’s competitors post-Transaction in the trade legs from/to each of North Europe and Mediterranean to/from each of Martinique, Guadeloupe and French Guiana only.
The Commission highlighted these territories’ geographical challenges, in that they are insular, isolated from mainland France and dependent on imports (90 per cent of the total trade flows in these territories), mostly from France. These factors explained the Commission’s unusually narrow approach to market definition, leading to an analysis of competition on trades such as North Europe to Martinique.
Regarding routes connecting Mayotte and Réunion, the Commission noted that other players such as Maersk and MSC were effective competitors for CMA CGM, therefore reducing the competition-related risks.
Whereas the European Commission once used to define geographic markets as entire trade routes (i.e., one ensemble formed by one direction and its reverse direction), this decision confirms the approach taken notably in the COSCO Shipping/OOIL and Maersk Line/HSDG cases, where a geographic market was decidedly defined as one leg of trade, i.e., from one point to another.
Short-sea container liner shipping services
The Commission considered there was no plausible issue regarding the provision of short-sea container liner shipping services resulting from the Transaction, and therefore reaffirmed that no departure from the Commission’s decisional practice regarding geographical market definition (as established, e.g., in the Maersk Line/HSDG case) was needed.
Freight-forwarding services
The Commission considered that the geographical market definition for the provision of freight-forwarding services could be left open in this specific case as, regardless of the approach taken, the Transaction, as modified by the commitments offered by CMA CGM, would not have the potential to undermine competition in the freight-forwarding sector.
Although most service providers consulted during the investigation considered that the market should be EEA-wide (given the international coverage of freight-forwarding operators), the Commission indicated that narrower segmentations of the French market between, on the one hand, Martinique, Guadeloupe, French Guiana, Saint Martin, Réunion and Mayotte and, on the other hand, mainland France, could be relevant. The Commission considered the geographical factors mentioned above, but also the fact that large freight forwarders do not operate in the overseas territories (unlike in mainland France) and that specific know-how is required to operate there (e.g., compliance with specific custom obligations).
Contract logistics
The Commission considered that the Transaction, as modified by the commitments offered by CMA CGM, did not result in any plausible competition law concerns in relation to the contract logistics sector, and therefore the geographic market definition could be left open. While Bolloré’s competitors generally expressed the opinion that the contract logistics market is either worldwide or EEA-wide, the Commission took a prudent approach and assessed the effects of the Transaction by reference to the narrowest plausible geographic market – that being nation-wide markets. Even on this narrow market segmentation, the parties’ combined market share did not exceed 20 per cent in any Member State, leading the Commission to consider that the Transaction would have no negative impact on competition in the sector.
Commitments: the detail
As mentioned above, CMA CGM made commitments to the Commission to alleviate the foreclosure risks posed by the Transaction.
Besides committing to divest Bolloré’s legal entities and activities in air-, land- and sea-freight forwarding, and contract logistics in Martinique, Guadeloupe, Saint Martin and French Guiana, CMA CGM has committed to:
• Divest specified relationships with customers which are commercially managed by Bolloré’s legal entities in mainland France;
• Transfer defined members of staff employed as part of these relationships in mainland France;
• Allowing the Balguerie Group (as purchaser of the divestment business) to benefit from arrangements under which Bolloré supplies products or services to the divested business, or which are necessary for the viability of the divested business, such as IT infrastructure and software, human resources and financial services;
• Not soliciting key personnel of the divested business or of the associated businesses in mainland France;
• Not providing freight-forwarding services to and from Guadeloupe, Martinique, Saint Martin and French Guiana (with limited exceptions for specific clients);
• Refrain from developing any local presence in the provision of freight-forwarding services in Guadeloupe, Martinique, Saint Martin and French Guiana; and
• Not acquire, directly or indirectly, in whole or in part, the divested business for a limited period of time. The exact period is confidential to the parties.
Cooperation between competition authorities: French Polynesia and New Caledonia
The Commission cooperated with the competition authorities of New Caledonia (Autorité de la concurrence de la Nouvelle-Calédonie) and of French Polynesia (Autorité polynésienne de la concurrence), as it does not have jurisdiction to review the effects of the Transaction in these territories. Both authorities cleared the Transaction following commitments offered by CMA CGM.
In French Polynesia, similarly to the solution accepted by the Commission, CMA CGM agreed to divest a large part of its local business in order to clear the purchase. However, in New Caledonia, the competition authority did not require any structural remedies: behavioural commitments were instead imposed, namely to reserve volumes for competing forwarding agents; to grant identical prices to all forwarding agents on the Europe-Nouméa route; and to raise awareness among the new entity’s teams of the need to respect commitments. The imposition of behavioural commitments contrasts with the Commission’s approach, which largely favours structural remedies. Behavioural commitments may, however, be considered a more appropriate remedy by regulators analysing the impact of transactions on smaller markets: in this case, the key objective is to ensure the connectivity of these territories to global trade networks
