JUSTICE OFFICIAL CALLS FOR END TO OCEAN CARRIER ANTITRUST IMMUNITY

JUSTICE OFFICIAL CALLS FOR END TO OCEAN CARRIER ANTITRUST IMMUNITY    A U.S. Justice Department official said it’s time to eliminate the ocean carriers’ immunity from the country’s antitrust laws.
   “We have consistently supported the elimination of antitrust immunity,” said Charles A. James, assistant attorney general for Justice's antitrust division, at a House Judiciary Committee hearing on Wednesday. “A cartel used to stabilize this industry is bad public policy.”
   The House Judiciary Committee is considering the Fair Market Antitrust Immunity Reform (FAIR) Act of 2001 (H.R. 1253), which calls for the elimination of ocean carrier antitrust immunity in the 1998 Ocean Shipping Reform Act.
   “Arguments based upon concerns about ‘ruinous’ or ‘destructive’ competition are often made, but are virtually never substantiated,” James added in written testimony to the House committee. “Congress has heard them many times before, often with respect to transportation industries such as railroads, airlines, and motor carriers … Over time, however, each of them has been substantially deregulated and the applicable antitrust exemption has been curtailed or eliminated, with the result that competition has increased for shippers and consumers, without the horrible consequences predicted by industry.”
   Robert Coleman, chairman of the Pacific Coast Council of Customs Brokers & Freight Forwarders Associations, agreed that other formerly regulated transport modes are better off today under “free market” competition.
   “Like other capital intensive industries that survive — and thrive — in the free market, ocean shipping should be released from the failed economic dogmas of the last century,” said Coleman, who also represented the National Customs Brokers and Forwarders Association of America, the New York/New Jersey Foreign Freight Forwarders and Brokers Association, and the Agriculture Ocean Transportation Coalition.
   But the ocean carriers disagree with the FAIR bill’s “radical surgery” of the shipping act. “The assumption that repealing antitrust immunity would have no negative effects on the current open, multilateral, non-restrictive regime, but would simply facilitate increased competition and lower rates, is ill-founded,” said Christopher Koch, president and chief executive officer of the World Shipping Council, in testimony before the House Judiciary Committee.
   Koch questioned the soundness of the Justice Department’s position. “It would produce destructive competition in an industry that is already fiercely competitive and suffering from inadequate returns on investment,” Koch said. “It would result in poorer service and fewer service choices, at likely higher post-consolidation rates. It would invite other nations to respond by applying their own, different, national shipping laws to the business. And, finally, it is likely to produce a shortfall of private investment in transportation infrastructure, with predictable long-term consequences for international trade.”
   Both the House Judiciary Committee and the Justice Department, however, noted their interest in recent consideration by other countries and governmental organizations to eliminate antitrust immunity in ocean carrier markets abroad.
   “Perhaps, it’s time for the United States to exercise leadership,” James said.