THE EU has axed the shipping industry's exemption from competition laws, in a blow to shipowners whose profits have long been bolstered by their ability to share vessels, according to UK's Financial Times.

The European Commission said that the exemption, which for years has enabled shipping lines to place containers on each other's ships, no longer appeared "fit for its purpose" and will not be renewed when it expires next April.

While the decision does not in itself end co-operation between shipping groups, it has the potential to upend the business of global trade, which has become increasingly dominated by a handful of container shipping companies which control most of the market through so-called alliances.

The move is also the latest sign of a clampdown on the shipping industry, which thanks to its international nature has historically proven difficult to regulate. It comes at a critical time for container carriers, whose earnings have plunged following a period of bumper profits during the Covid-19 pandemic, when an online shopping boom combined with lock jams at ports caused demand to outstrip supply.

"It really is a big deal," said Mike Garratt, director at MDS Transmodal, a shipping consultancy whose research informed the commission's decision. "[There were] nine companies who almost seemed to be beyond the law, [controlling] most of the value of world trade. [This] has dramatic implications for the deep sea shipping sector."

The world's nine largest container shipping lines, several of whom have grown through acquisitions of smaller rivals, have formed three separate alliances over the past decade, allowing them to control supply and put a floor under the cost of shipping during years of low earnings.

But when freight rates rose to record highs during the pandemic, profits soared, infuriating customers who faced severe delays importing and exporting goods through congested ports. During the three years to 2022, container shipping groups made as much money as they had during the previous six decades combined, according to consultancy Drewry.

The commission, which received submissions from 33 shipping customers, said that the capacity shortages recently faced by these businesses had "reignited the debate" over the industry's so-called Consortia Block Exemption Regulation (CBER). Once subject to EU antitrust rules, shipping companies will have to review the legitimacy of their co-operation agreements, deals the European Commission has the power to break up and fine.

Co-operation between shipowners has been exempted from EU competition rules through different regulations since 1986. The CBER, adopted in 2009 and renewed twice since, has guaranteed the legitimacy of consortiums involving companies whose combined market share does not exceed 30 per cent.

The commission's decision has been resisted by the shipping industry, which also faces growing pressure in the US, where President Joe Biden last year promised to "crack down on ocean carriers whose price hikes have hurt American families".

John Butler, president of the World Shipping Council, said the lobby group disagreed "with the logic behind the decision".