TOKYO: The U.S. maritime regulator has rejected an application by Japan’s three biggest shipping companies to operate as a merged company while their transaction is still being finalized back home.
An approval would have given container operators Nippon Yusen K.K . NPNYY -1.96% , Mitsui O.S.K. Lines Ltd. 9104 -0.88% and Kawasaki Kisen Kaisha Ltd. 9107 -1.03% the right to share ships, port calls and negotiate with third-party service providers as a single company while their $2.7 billion merger is months away from being approved by Japanese regulators.
“Much of what the tripartite parties were asking for revolved around premerger coordination,” Federal Maritime Commissioner William Doyle said. These provisions would violate “gun jumping” laws that forbid the sharing of competitively sensitive information or the premature combining of the parties.
Kawasaki declined to comment. NYK didn’t return requests for comment and Mitsui OSK couldn’t be reached for comment.
The three Japanese liners had expected to complete their tie-up by July at the earliest and start operating in 2018. The carriers have said the combined operation would hold a 7% global market share and save them around 110 billion yen, or about $1 billion, annually.
The proposed merger, which will create the world’s sixth biggest container player, is an attempt to cope with a dramatic decline in freight rates and shipping volumes for companies that move the vast majority of manufactured goods across the oceans.
The industry’s downturn has led to an increasing number of alliances and moves toward consolidation, while also leading to the bankruptcy last year of South Korea’s Hanjin Shipping Co., once the world’s seventh largest shipping line.
