China has blocked a proposal for an alliance between the world’s three largest shipping companies after the deal was approved by regulators in the United States and Europe. The so-called “P3 Network” would have combined the operations of shipping companies, A.P. Moeller-Maersk, Mediterranean Shipping Co., and CMA CGM SA on their Asia-Europe, Trans-Pacific, and Trans-Atlantic routes. Together, the three companies control nearly 47 percent of the world shipping market.
The move is a first for China, which has never before blocked a merger made of solely foreign companies. China’s Ministry of Commerce last week said the deal would allow the operations of the three companies to be too “closely coordinated,” which would adversely affect competitors, including Chinese shipping companies.
The arrangement, which was announced last June and approved by both the US Federal Maritime Commission and the European Commission, was slated to begin operations in late 2014. The three companies say it would have lightened costs by as much as $1 billion and significantly reduced fuel consumption. The Danish business conglomerate Maersk was to account for 42 percent of the total fleet of 255. With no alternative plan prepared, the companies plan to abandon the P3 project, causing stockholders to jump ship.
Maersk had been having a successful 2014, with shares up to a near seven-year high of $2656. Since the decision, shares have fallen 8.7 percent. The ruling affected Asian companies as well, as China Cosco Holding Co. fell 1.3 percent in Hong Kong trading.