Commission frowns on liner carrier antitrust immunity

Commission frowns on liner carrier antitrust immunity    A 12-member panel of antitrust attorneys made clear its dislike for liner carrier antitrust immunity, and praised the European Commission for its recent decision to abolish this privilege, during a hearing in Washington on Wednesday.
   “Shame on us that we are trailing behind” the European Union, said Commissioner Debra Valentine of the Antitrust Modernization Commission (AMC), a body created by Congress in 2002 to examine antitrust law exemptions.
   Liner carriers in the U.S. trades have been exempt from the country’s antitrust laws since the implementation of the 1916 Shipping Act. The privileges were carried over to the 1984 Shipping Act. This exemption has allowed the carriers to jointly discuss pricing without breaking the law. Antitrust immunity, although more limited, remains in place under the 1998 Ocean Shipping Reform Act, and has been allegedly used by the liner carriers more recently to impose uniform surcharges on shippers and non-vessel-operating common carriers.
   The commissioners repeatedly asked the representatives of the World Shipping Council, American Association of Port Authorities, and the Federal Maritime Commission about the reasons for retaining liner carrier and marine terminal antitrust immunity in the post-OSRA environment. “Why shouldn’t they be abolished outright?” said AMC Commissioner John Shenefield.
   Stanley Sher, an attorney representing the World Shipping Council, warned the commission to “examine the facts” before making any recommendations on whether to end antitrust immunity for liner carriers. He said the consequences of eliminating the privilege could injure an already volatile industry. “If the system is working well, why take the risk?” Sher said.
   Jean Godwin, AAPA’s executive vice president and general counsel, said antitrust immunity for marine terminals “works well” and helps to “facilitate discussions that improve operations in ports.”
   Both Sher and Godwin, along with FMC Chairman Steven Blust, emphasized that controls are in place within the FMC to prevent industry price-fixing abuse.
   The AMC commissioners didn’t buy it. “I will bet you a milkshake that there is garden variety price fixing going on under the nose of the FMC, and I like vanilla,” Shenefield said.
   Ed Greenberg, transportation counsel for the National Customs Brokers and Forwarders Association of America, said he doesn’t agree with the carrier argument that the ocean shipping industry would be thrown into chaos if the antitrust immunity exemption is abolished.
   “The world won’t come to an end with the elimination of antitrust immunity,” Greenberg said. “If it was eliminated, I think it will be for the positive.”
   AMC Chairman Deborah Garza recognized that shipper representatives were lacking on the panel, but said it “wasn’t by design” of the commission. The commissioners had received written testimony from the National Industrial Transportation League.
   “Businesses engaged in the U.S. foreign trade should not be required to pay higher rates or charges that are derived from collectively established benchmarks, unless there is a compelling need to permit the anticompetitive conduct,” the NIT League said.
   However, the shipper group is not opposed to liner carrier discussions regarding vessel sharing, slot-chartering and other improvements to carrier asset use. The NIT League said it “strongly supports these kinds of efficiency-enhancing activities that do not involve the collective establishment of shipping rates and charges.”
   Peter Gatti, executive vice president of the NIT League, told Shippers’ NewsWire that the government should consult with the maritime industry — shippers, NVOs and carriers — to come up with the most sensible recommendations for phasing out aspects of antitrust immunity in OSRA. This review should also include an analysis of the recent changes to European maritime shipping laws, he said.
   Andrew Heimet, AMC’s executive director and general counsel, said the commission expects to issue its recommendations in a report to Congress by April 2007. “Then it’s up to Congress,” he said. “They will decide what do with our report.”