SHIP LIABILITY LIMIT PLAN HITS ANTITRUST SNAG IN EU

SHIP LIABILITY LIMIT PLAN HITS ANTITRUST SNAG IN EU

The European Commission may be about to put its inimitable stamp on the cozy world of marine liability insurance.

The International Group of Protection and Indemnity Clubs - effectively the policy-making unit for international marine liability insurance, which provides 95 percent of the world's merchant fleet with marine liability cover - could be facing a two-pronged assault by Europe's competition bureaucrats over its plans to limit liability coverage, and concerning its exemption from European Union antitrust rules.A major European shipowner association said Friday the proposal to limit the amount of cover provided by the P&I clubs to $20 billion per liability claim may be in violation of European antitrust law.

In a letter to the chairman of the International Group of P&I clubs, John Goumas, president of the Union of Greek Shipowners, said, "The proposal constitutes an essential change to the International Group agreement. We are advised that it appears to be prima facie anti-competitive under EC law and may also constitute an abuse of dominant position."

Discussions concerning the proposal to limit non-oil pollution cover offered by the clubs have continued throughout the summer and are now at an advanced stage despite fervent opposition to the proposal from some parts of the shipping industry. Opponents to the plan claim the proposed level of cover is too high, and efforts to collect money to fund such cover could bankrupt many shipowners.

The Greek shipowners' assertion that the limit is also anti-competitive creates another problem for the International Group, which had hoped to implement the limit on Feb. 20, 1996, the date shipowners next renew their liability insurance.

''Notwithstanding our request for a stay of the decision, would it not be necessary and advisable for the International Group to notify the compromise proposal to the European Commission in order to obtain clearance under EC competition law, prior to asking club boards for endorsement?" the Greek shipowners said.

A formal complaint to the Commission competition directorate, DGIV, over the legality of the cover limit could pre-empt a full-scale examination of the P&I system and its treatment of shipowners.

The 15 members of the International group cooperate in the purchase of reinsurance and in the settlement of claims above a certain level. Members controversially agree not to undercut rates for the first year of membership so that stability is maintained within the group.

DGIV is currently processing the International Group's request to renew the antitrust exemption, which expired earlier this year. While the group is confident that renewal is little more than a formality, a U.K. consumer watchdog confirmed Monday that it had raised a number of questions about the

clubs' exemption.

A spokesman from the U.K. Office of Fair Trading, which monitors trading practices and their effect on U.K. consumers, confirmed it had made a submission to the commission, but declined to give any other details. "We have passed on our views to DGIV," he said.

The commission has already delayed its decision on the exemption, which was expected at the end of the commission's summer recess. Lawyers acting for the International Group said they believed the delays were due to the directorate's heavy workload.