Conditions on information sharing and qualitative membership will not dilute quality.

There will be no dilution of quality within the International Association of Classification Societies following a preliminary agreement with Brussels competition authorities that could see the class association open up its membership and provide access to technical information.

The European Commission’s competition directorate yesterday published its long-awaited Market Test Notice, which provides a summary of its current investigation into IACS.

The document, which confirmed that the association’s membership criteria and transparency had sparked the initial concern from European Union regulators, laid out a series of new commitments that IACS members will have to abide by if confirmed.

This includes a new approach to assessing applications for membership based more on qualitative rather than the existing quantitative criteria.

Under the new rules, non-IACS members will be entitled to apply for membership if they can demonstrate that they have fulfilled new quality criteria, effectively removing the traditional size barrier to entry. Applicants will also have recourse to an appeals board, appointed by IACS but independent of the association’s control.

The new commitments also propose opening access to IACS’ technical working groups to non-member classification societies and further developing the sharing of background information used in the development of IACS technical requirements.

IACS remains confident that the commitments, which have been published in full on the EU competition directorate’s website, can be accommodated while still allowing the association to maintain its current standards.

“This is all part of the very careful dialogue we have had with the commission to ensure that there is no dilution of the quality of our work,” IACS permanent secretary Richard Leslie told Lloyd’s List.

Under the process set out by the commission, the agreement is now open to market scrutiny for a period of one month. If no objections are forthcoming, IACS hopes it can put an end to the investigation that was launched by the commission in January 2008. If objections are raised, however, this could take considerably longer.

Once agreed, the commitments become legally binding, and should IACS be found in contravention of these rules it and its members will be liable for a fine of up to 10% of its total worldwide turnover.

While IACS does not agree with the commission’s findings or concerns raised, it is confident that the new commitments will put an end to the investigation. It is, however, unclear what immediate impact such an agreement could have on the association’s membership structure.

Following the publication of the commitments, the Polish register PRS yesterday confirmed that it would “welcome a return to IACS”.

The Hellenic Register of Shipping, meanwhile, was unavailable for comment, but is widely viewed as an obvious candidate to make a play for IACS membership under the new commitments.

IACS officials, however, admit that there are far more than just these two societies that could potentially attempt to join.

“The key question there is, how many of them develop their own rules, which is of course the element that distinguishes an inspection body from a classification society — and that varies,” said Mr Leslie.

“I don’t think there are that many outside of the 15 or so that everyone knows about, but there are about 65 that could potentially apply — in which case our appeals board is going to be quite busy.”

IACS was unable to speculate about the potential effect an increased level of non-member class societies would have when it comes participation in IACS technical groups, because nothing has yet been agreed.

Mr Leslie said the international association would “strive to ensure the efficiency and quality is maintained throughout the process; that is what this is all about”.

IACS chairman Oh Kong-gyun said: “The primary concern of all IACS member societies is to promote the safety of life, property and the natural environment.

“We believe the commitments we have offered to the commission are in line with those core principles and are also closely aligned with the commission’s own approach to evaluating recognised organisations.”

Richard Meade and Tony Gray
Lloyd's List, 11 June 2009