CREEL DEFENDS ANTITRUST IMMUNITY OF CARRIERS

CREEL DEFENDS ANTITRUST IMMUNITY OF CARRIERS    Harold Creel, chairman of the Federal Maritime Commission, told the Judiciary Committee of the U.S. House of Representatives that the Ocean Shipping Reform Act of 1998 could be amended, but without ending the antitrust immunity of ocean carriers.
   “Rather than eliminating immunity altogether, I believe that further fine-tuning of the existing system may be desirable,” Creel told the recent hearing of the Judiciary Committee in Washington. James Sensenbrenner, chairman of the committee, introduced the billl H.R. 1253, the “Free Market Antitrust Immunity Reform Act of 2001,” to remove the antitrust immunity of ocean carriers.
   Creel said that OSRA was a compromise among the affected parties in the industry, and included retention of antitrust immunity for agreements among ocean common carriers.
   “OSRA has significantly transformed the industry and is working as Congress intended, resulting in more competition in the industry,” he said. “As a consequence, I cannot support H.R. 1253, which eliminates antitrust immunity for shipping lines in our international trades.”
   “The aim of allowing limited antitrust immunity in ocean transportation is not simply to ensure adequate returns for the liner shipping sector,” Creel said. “Rather, the primary objective is far broader and much more important: to ensure an adequate and efficient supply of ocean transportation services so that U.S. exports and U.S. trade can compete in the global marketplace.”
   Creel said that, when shipping lines use their limited antitrust immunity to coordinate their operations or share assets to reduce costs or improve service, or even to stem losses from low rates that might threaten their viability, “it is not just the carriers who benefit, but also U.S. businesses and consumers.”
   Efforts by ocean carrier groups to use their immunity to influence prices “often fail” because individual carrier pricing decisions “are very much subject to market forces,” Creel said. This is shown by minutes of the carrier agreements filed with the FMC, the low rates of return of the carriers themselves, and press reports of failed carrier attempts at rate restoration and surcharge implementation, he said.
   “Nevertheless, the ability to engage in some collective pricing and/or cost-saving arrangements provides many carriers with some protection from risk, sufficient to justify their continuing to make enormous long-term investments in serving our trades,” Creel said. Without these protections, operating ships to serve U.S. shippers would be an “even riskier and less attractive investment” for many of these carriers.