US rejects Japan shipping merger


Move casts doubt on future of 3-way deal

US maritime regulators rejected an application to operate as a merged company submitted by the three Japanese containership operators, casting doubt on the future of the merger, several reports said on Wednesday.

Nippon Yusen K.K. (NYK Line), Mitsui O.S.K. Lines (MOL), and Kawasaki Kisen Kaisha (K-Line) had asked US regulators for permission to start a company that would allow them to share ships and port calls at US ports.
The venture would also have given them rights to negotiate with third-party service providers as a single company.

Meanwhile, the merger between the three Japanese carriers is still awaiting regulatory approval in their home country.

Federal Maritime Commissioner William Doyle in a statement explaining the rejection said that the three companies were requesting arrangements based on “premerger conditions,” which might violate US laws against companies sharing information related to competition.

While the US rejection of the pre-merger joint venture does not necessarily mean the eventual merger,
assuming it is approved by Japanese regulators, will also be rejected by US regulators, it does add several steps to the process that might keep the merged company out of US ports for a period of time, and may make the Japanese regulators scrutinize the deal more closely, an analyst said.

As of now, the three companies said they still expect the merger in Japan to be finalized by July, and start operations in 2018.

Once the merger is completed, the new company would be the world’s 6th largest container line, with a 7 percent share of the global market.

An earlier statement from K-Line explained that the merger would save the three companies about $1 billion per year in operating costs.


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