4 THE JOURNAL OF COMMERCE www.joc.com
Editor's Letter
Mark Szakonyi
ANTITRUST INVESTIGATORS' raid of
the biannual Box Club meeting in San
Francisco — pre-empting the agency
tasked with regulating container
shipping — indicates the Department
of Justice is targeting a "gray area"
between its authority and that of the
Federal Maritime Commission,
The March 15 action was the
first time in decades that maritime
attorneys could recall the DOJ serv-
ing subpoenas on the container
lines, much less the CEOs. The meet-
ing of the International Council of
Containership Operators, the Box
Club's official name, is a private gath-
ering of the heads of the major carriers.
The DOJ has a history of antipathy
toward the FMC's handling of the
limited antitrust immunity carriers
enjoy under the Shipping Act. Anti-
trust investigators believe that
decades of being able to legally discuss
pricing under antitrust immunity has
left the industry without a disciplined
culture to follow antitrust laws.
But the decision to serve sub-
poenas, especially on the CEOs, is an
escalation of the DOJ's approach. The
most recent direct action affecting
major carriers came when the
department issued a civil investigation
demand to members of the Trans-
pacific Stabilization Agreement. The
group represents 15 of the largest
carriers in the trans-Pacific trade.
Before the DOJ's action, the FMC
had begun a fact-finding investiga-
tion, which started in 2002, and was
extended through 2003, after allega-
tions that member carriers violated
the Shipping Act during the prior
service contract season. The results of
the investigation were never disclosed
The DOJ has regularly raised con-
cerns about the FMC's approval of
major vessel-sharing agreements.
Those concerns have been renewed
by the recent slew of mergers and
acquisitions that has increased con-
centration within the industry. The
FMC has yet to reject a VSA, with the
three newest ones — THE, Ocean, and
2M alliances — taking effect April 1.
Antitrust investigators also have
raised concerns about member car-
riers'
ability to exchange sensitive
information, saying it allows them
to coordinate domestic third-party
services such as stevedores and tug
services. In a statement on the Ocean
Alliance, the DOJ on Nov. 22 said: "The
agreement appears to contemplate
collaboration that extends beyond the
scope of the Shipping Act." Container
lines have proposed language in
alliance agreements that would allow
carriers to contract jointly with third
parties, only to drop those proposals
after FMC members objected.
While it hasn't prosecuted major
container lines for years, the DOJ has
launched prosecution cases against
roll-on, roll-off carriers and Jones Act
carriers. The investigation of a ro-ro
price-fixing conspiracy centered in
Baltimore produced guilty pleas and
multimillion-dollar fines by Wallenius
Wilhelmsen Logistics, "K" Line Japan,
NYK Line Japan, and CSAV. Eight
carrier executives have pleaded guilty
in the last few years.
Years earlier the DOJ prosecuted
carriers operating in the domestic
trade of US mainland-Puerto Rico
trade. Horizon Lines, Sea Star Line,
and Crowley Maritime pleaded guilty
to price-fixing charges and paid mul-
timillion-dollar criminal and civil
penalties, and six former Horizon and
Sea Star officials were sentenced to
prison for their parts in the scandal.
The extent of DOJ's investigation
isn't clear, and there's no guarantee it
will become clear anytime soon. The
FMC and DOJ declined to comment.
Although it's unusual for carrier
CEOs to be subpoenaed, carriers
have long been in the sights of
antitrust regulators in the US and
the European Union. In a settlement
with EU carriers last year, 15 car-
riers ag reed to quit publishing
a nd communicat-ing details of
planned general rate increases after
trustbusters raised concern that
the announcements could signal
pricing behavior among carriers. The
agreement and a public explanation
of antitrust officials' concern came
two years after carriers' offices were
raided by EU authorities. JOC
'Gray' Area of Authority
The Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, April 3, 2017, Volume 18, Issue No. 7. The Journal of Commerce is published
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