Two members of the US Federal Maritime Commission (FMC) say the agency should have the authority to legally block working agreements between ocean carriers on anti-competitive grounds, rather than relying on courts to take such action.
Commissioners Carl Bentzel and Max Vekich, in a letter to the heads of House and Senate transportation committees, said they want the US Shipping Act of 1984 to include new amendments that would give the FMC the ability to block agreements such as space charters or vessel-sharing deals if they are determined to reduce competition.
The commissioners argued that the additional amendments are consistent with the new regulatory power the FMC received this year with the passage of the Ocean Shipping Reform Act of 2022 (OSRA-22).
“While [OSRA-22] provided the Commission with important additional authorities, there is more that can be done to assist US shippers,” the letter said. “We strongly believe that modifying the process by which the Commission reviews agreements … would substantially strengthen the Commission’s oversight of potentially anti-competitive agreements.”
Currently, the FMC must file a lawsuit in federal court to block any working agreement it wants to challenge and has the burden of proof to show a judge that such an agreement is anti-competitive. Under the amendments suggested, the FMC would be able to issue an injunction against a working agreement. The parties to that agreement would be able to appeal that ruling in federal court, and the burden of proof to show that the agreement wasn’t anti-competitive would be on them.
Legal action to block working agreements are rare. The last and only time the FMC tried to block a working agreement was in 2008 when it asked for an injunction on the ports of Los Angeles and Long Beach from cooperating on a clean truck program because of its potential to increase transportation costs and the subsidies paid to certain motor carriers.
Referring to the need to go through courts, “experience has shown that this process is cumbersome and time-consuming; and some would even argue designed to impede the Commission’s oversight of agreements,” the letter from Bentzel and Vekich said.
After four decades of taking a largely hands-off approach to the shipping industry, the FMC, with the passage of OSRA-22, is being tasked with looking into whether too much market power resides with the three big container alliances. In Senate testimony earlier this year, FMC Chairman Daniel Maffei said that existing laws don’t provide enough time to review vessel sharing or similar arrangements. Likewise, even if market forces change to make an earlier agreement anti-competitive, those agreements don’t expire, limiting the ability of the FMC to challenge those deals at a later date, he added.
Maffei at the time said the burden of proof should be put on the ocean carriers.
The FMC is trying to secure more tools to tackle competition issues in the shipping industry. Last February, the FMC and the Department of Justice said they would increase cooperation on anti-trust investigations into the shipping industry.