China has sunk dreams of a merger merger proposed by the three largest shipping companies. Antitrust laws blocked the fusion of the Danish company, Moeller-Maerrsk (the initiative’s leader), the Swiss company, Mediterranean Shipping, and the French company, CMA CGM SA. Combined, the three companies control almost 40% of the world’s container handling. The new alliance, called P3, got the all clear from authorities in the US and Europe, obviously despite lengthy investigations, because this colossal power could effectively condition free market principles. The shipping giants’ determination is understandable: rationalizing investments, promoting alliances, and eliminating middlemen. The financial crisis intensified problems that were visible through the offer’s fragmentation. Ships with titanic dimensions were designed—even reaching up to 18,000 TEU—that needed consistent freight traffic to sustain them. At the moment, the recession isn’t stimulating trade and consumption. The capital invested in shipyards must, therefore, be protected with reduced costs, which could theoretically come from mergers. In fact, the new company intended to work in pool with 255 container ships rather than 300 to reduce excess global supply. It seems obvious that the birth of such a giant would have repercussion on competitors as well as other connected sectors. Chinese shipping lines—among which Cosco is in public hands—have also been struck by the financial crisis and the new competition could push them to the industry’s margins. Chinese ship builders—who are still beneficiaries of South Korean technology—would be penalized by P3’s hypothetical dominant position, just like port managers and companies active in logistics. The legal terms of the rejection are not yet known, but the political-economic reasons are very clear: to eliminate a foreign competitor whose strength would have been out of Chinese control, of vital interest to China. This is the second time since its birth that the Chinese antitrust law has made itself heard. Previously, only Coca Cola’s attempt to buy a Chinese company was rejected. Even more important was the threat of interfering with Glencoe’s (a mineral trading house) acquisition of the producer, Xstrata. After lengthy negotiations to try and create a single entity to extract and sell the raw materials, the transaction resulted in Glencoe managing the acquisition. The go ahead from Chinese antitrust regulators was only provided last April after the anglo-Swiss company sold the Peruvian mine, Las Bambas—one of the world’s largest copper deposits—to a consortium from Beijing. In this case, China secured a consistent stream of supplies for its industries, while the dimensions of the new company—to whom it gave authorization—are not dissimilar from P3. This scenario highlights the differences in treatment and elasticity of principles. China is not alone in this pragmatic and nonchalant attitude. More than other countries, it complains about inexperience acting on the markets. China’s hundred-year isolation has not permitted it to comprehend that the external world’s rules—like antitrust—must be managed with care and impartiality.
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