Proposed legislation would give marine regulator antitrust powers

proposed legislation

MAY 10, 2023 — U.S. Representative John Garamendi has introduced legislation aimed at giving the Federal Maritime Commission (FMC) the power to undertake antitrust investigations of vessel sharing agreements (VSAs) among ocean carriers.

The bill aims to strengthen the Ocean Shipping Reform Act of 2022 (OSRA 22), which has given the FMC greater powers to scrutinize the ocean carrier industry.

However, OSRA 22 did not have any provision that would enable the FMC to undertake antitrust investigations into VSAs, which have long raised suspicions of collusion in government circles.

The proposed law does not seek to ban ocean carrier alliances, but only to speed up the investigatory process for shippers who suspect their charges may have been illegally increased by collusion between carriers.

Currently, the FMC is required by law to seek a Federal Court Order before it can block what may be an anticompetitive agreement between two or more ocean carriers.

The proposed legislation would enable the FMC to bypass that step and undertake antitrust investigations without Court approval.

“This bipartisan bill would allow the FMC to block any agreements among ocean carriers and marine terminal operators determined to be unreasonably anticompetitive without having to first obtain a federal court order,” Mr. Garamendi’s office said.

But John Butler, President and Chief Executive of the World Shipping Council, opposed Mr Garamendi’s proposal, saying that “nobody has offered a reason why we should throw away such a useful tool as vessel sharing arrangements.”

He suggested that some of “the rhetoric comes from a misunderstanding about how VSAs help the supply chain work better” and that “we look forward to working with the bill’s sponsors to better understand their policy objectives.”

The proposed legislation was welcomed by Federal Maritime Commissioners Max Vekich and Carl W. Bentzel, who had jointly requested that the U.S. House Committee on Transportation and Infrastructure make this change in federal law.

Commissioner Bentzel referred to the bill as a “vital fix” while Commissioner Vekich said it will “simplify the process” by which the FMC reviews agreements among ocean carriers.

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